Canadian, U.S. stock markets regain some ground as tech stocks bounce back Tuesday

TORONTO — Strength in technology stocks led Canada’s main stock index higher on Tuesday, while U.S. stock markets also rose to regain some of the ground lost Monday after a Chinese AI startup called DeepSeek unveiled a large language model that apparently rivals those created in the U.S.

Tuesday saw “almost a perfect reversal from yesterday,” said Jules Boudreau, senior economist at Mackenzie Investments.

On Monday, a number of sectors had a good day but were overshadowed by a slide in tech stocks, said Boudreau.

“Today it’s the opposite,” he said, with markets being driven higher by tech names like Nvidia and Apple even as some other sectors were down.

In New York, the Dow Jones industrial average was up 136.77 points at 44,850.35. The S&P 500 index was up 55.42 points at 6,067.70, while the Nasdaq composite was up 391.75 points at 19,733.59.

The DeepSeek announcement shook investors as it appeared to show AI might not need the high levels of investment U.S. companies have been putting into the emerging technology.

One outlier in the tech space this week was Shopify, noted Boudreau, which was flat on Monday and rose almost ten per cent Tuesday, helping the TSX post gains.

“I think the story there is these kind of mid-level tech firms would be the ones to benefit the most from more open source, cheap AI,” Boudreau said.

The S&P/TSX composite index closed up 130.30 points at 25,419.45.

This week brings earnings reports from several big tech names. The sector has been driving much of the market growth, with high hopes for AI’s earnings potential.

“In general, the expectations are pretty high for earnings growth all across the board for these tech stocks,” said Boudreau, though he noted that tech companies’ earnings beats have been moderating.

However, after the DeepSeek news there may be more scrutiny from investors on what companies plan to spend on AI, he added.

Uncertainty around tariffs continues to swirl as Feb. 1 approaches. On Monday, incoming Treasury Secretary Scott Bessent talked about taking a slower approach, starting with 2.5 per cent, but not long after, U.S. President Donald Trump contradicted him.

“We have no idea what we’re going to get,” said Boudreau.

“So tariffs are still driving the picture, even though this DeepSeek story has been driving most of the index over the past two days.”

Wednesday will see interest rate decisions on both sides of the border, with the Bank of Canada expected to announce a cut and the U.S. Federal Reserve expected to hold, said Boudreau.

Market watchers will likely be listening for any comments from central bankers on potential tariffs, he said.

“Hopefully we’ll have some scenario analysis about tariffs and give us maybe a hint of how the Bank of Canada would act if tariffs were imposed.”

The Canadian dollar traded for 69.47 cents US compared with 69.54 cents US on Monday.

The March crude oil contract was up 60 cents at US$73.77 per barrel and the March natural gas contract was down 13 cents at US$3.12 per mmBTU.

The February gold contract was up US$29.10 at US$2,767.50 an ounce and the March copper contract was up two cents at US$4.25 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Jan. 28, 2025.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Rosa Saba, The Canadian Press