Canada’s benchmark S&P/TSX Composite rallied on Friday as U.S. consumer inflation data for January suggested cooling price pressures, renewing some investor hopes for rate relief later this year. The index added 552 points, a 1.7% gain, to finish at 33,015.27.
The move came after the TSX had fallen 2.4% to 32,465.28 in the prior session, extending a pullback from a record high reached earlier in the week. Friday’s advance helped pare some of that retreat, but market participants remained attentive to several cross-currents that are shaping sector-level performance.
Technology was a notable drag on sentiment despite the overall advance. Canadian tech stocks fell 3.7% as investors continued to wrestle with renewed concerns about possible disruptions tied to new artificial intelligence models that have unsettled the sector. That unease in tech also echoed in U.S. markets, where the previous trading day had seen pronounced losses in technology-heavy indices.
Precious metals and the broader materials complex lagged as well. Waning market bets that the Federal Reserve would cut interest rates in the first half of 2026 weighed on metals prices, a dynamic that hit Canada’s materials sector including metals mining shares.
U.S. markets and prior session performance
U.S. equities were mixed on Friday. The S&P 500 was up 0.2% at 6,844.95, the Dow Jones Industrial Average rose 0.3% to 49,581.38, and the NASDAQ Composite was little changed at 22,589.35.
Those gains contrasted with a sharp pullback in the previous session, when the Nasdaq Composite dropped about 2%, the S&P 500 fell nearly 1.6% and the Dow shed almost 670 points, or roughly 1.3%. The earlier weakness had been concentrated in technology names as investors reassessed the competitive and demand implications of recent AI developments.
January CPI readings
Data from the U.S. Bureau of Labor Statistics showed headline consumer price index (CPI) inflation rose 2.4% year-over-year in January, below the consensus forecast of 2.5% and down from December’s 2.7% rate. On a month-over-month basis, headline CPI increased 0.2%, also under the estimated 0.3% gain. Core CPI was reported as coming in line with expectations on both month-over-month and year-over-year measures.
The relatively soft headline print arrived days after a notably strong January nonfarm payrolls report and appeared to nudge market-implied probabilities that the Fed will ease policy this year slightly higher, as tracked by the CME FedWatch tool. Nonetheless, uncertainty over the inflation trajectory persisted, in part because recent stronger employment data had underscored a still-tight labor market.
Market attention remained fixed on inflation readings for additional cues on how quickly monetary policy might pivot. The record of CPI prints surprising to the upside in recent Januaries contributed to investor caution about the prospect of sticky inflation and its implications for interest rates.
Corporate headlines in tech
Several technology companies issued notable results and guidance after the U.S. market close on Thursday. Arista Networks kept its full-year gross margin guidance intact, despite the company being pressured by rising memory chip prices. Applied Materials released an upbeat forecast, with the company highlighting how the AI-driven surge in demand and a memory chip shortage are supporting sales for the world’s largest U.S. semiconductor equipment maker. In contrast, Pinterest forecast first-quarter revenue below analyst estimates, citing sharper advertising spending cuts by tariff-affected retailers and intensified competition from larger rivals.
Commodities and risk drivers
Gold recovered some of its prior-day losses in European trade, drawing safe-haven bids amid renewed geopolitical uncertainty reported in several news items. Spot gold rose about 1% to $4,970.87 an ounce, while gold futures were up 0.9% at $4,991.24 per ounce after spot prices had slid more than 3% in the previous session.
Oil prices remained under pressure and were headed for a weekly decline. Brent futures fell 0.5% to $67.14 a barrel and U.S. West Texas Intermediate crude was down 0.7% at $62.38 a barrel. Both contracts had slipped nearly 3% in the prior session and were on course for just under 1% losses for the week, with traders weighing forecasts pointing to a sizable supply surplus and higher inventories as well as easing concerns of a possible U.S.-Iran military escalation.
Investor takeaways
Friday’s session underscored the market’s current balancing act: cooler headline inflation readings have provided room for optimism about future rate relief, yet a tight labor market and persistent sector-specific risks - notably in technology and materials - continue to inject volatility. Corporate outlooks that reflect strength tied to AI demand helped buoy some technology-related names, while other firms exposed to advertising cycles faced more immediate revenue headwinds.
Traders were pricing a high probability that policy would remain unchanged in the near term for the March and April Federal Open Market Committee meetings, according to CME FedWatch calculations. That positioning, combined with the mixed flow of economic and corporate data, suggests market sensitivity to forthcoming inflation releases and company reports.
Data points, index levels and company statements cited in this article are drawn from the reported session and reflect the information disclosed through official market and corporate releases.