| Index | Close | Week | Year to date |
|---|---|---|---|
| S&P/TSX Composite | 35,800.89 | -0.02% | 12.89% |
| Dow Jones Industrial Average | 51,828.62 | 0.28% | 7.83% |
| S&P 500 Index | 7,743.41 | 1.21% | 13.12% |
| Nasdaq Composite | 27,068.72 | 2.06% | 16.46% |
| 10-year Canadian Bond Yield | 3.94% | 0.07% | 0.52% |
| 10-year U.S. Treasury Yield | 5.17% | 0.16% | 0.99% |
| Canadian Dollar | US$0.7070 | -1.01% | -3.10% |
Prime Rate 4.45% |
|||
Weekly performance ended September 25, 2026.
Sources: Morningstar Direct, Bank of Canada and U.S. Department of the Treasury
Markets fluctuated amid diplomacy hopes and rising bond yields
The major North American stock indexes swung sharply last week as investors weighed developments in the Middle East, diplomatic meetings involving world leaders and a surge in government bond yields.
Canada’s TSX rose 0.6% on Monday as strength in technology and financial shares helped offset weakness in the energy sector. Signs of diplomatic progress at the United Nations and easing oil prices supported U.S. markets. The Dow gained 0.7%, the S&P 500 rose 1.5% and the Nasdaq climbed 2.3%.
Markets extended their gains on Tuesday. The TSX grew 0.9%, led by technology and materials shares, while the Nasdaq gained 0.5% to notch another record close. The S&P 500 finished flat and the Dow slipped 0.4%. Hopes that Middle East peace discussions could ease supply disruptions also supported sentiment.
The tone shifted on Wednesday as government bond yields surged and renewed concerns about inflation and interest rates weighed on markets. The TSX fell 1.6%, its largest one-day decline in more than three months. In the U.S., the Dow lost 0.7%, while the S&P 500 and Nasdaq declined 0.8% and 1.1%, respectively.
Trading remained cautious on Thursday. The TSX slipped 0.1%, while the Dow fell 0.3%. The S&P 500 finished little changed and the Nasdaq edged slightly higher. Rising bond yields and higher oil prices continued to create uncertainty about the interest-rate outlook.
Stocks rebounded on Friday as technology shares advanced and easing concerns about the bond market improved sentiment. The TSX gained 0.3%, while the Dow rose 0.9%. The S&P 500 and Nasdaq each added 0.5%.
U.S. Treasury yields climbed to multi-year highs
Government bond yields moved sharply higher this week, becoming a major driver of market performance.
The yield on the benchmark U.S. 10-year Treasury note climbed above 5% and reached its highest level since 2007. The change reflected growing concern that inflation could remain elevated and central banks may need to keep interest rates higher for longer. Rising oil prices, resilient economic growth and expectations for additional U.S. Federal Reserve (the Fed) rate increases have all contributed to higher yields.
The rise weighed on stock markets, particularly on Wednesday, when North American indexes recorded broad losses. With yields now near multi-decade highs, investors are increasingly focused on what the bond market may be signalling about inflation, economic growth and the path of interest rates.
Canadian retail sales pointed to softer consumer spending
According to a Statistics Canada report on Wednesday, Canadian consumer spending slowed in July, although early indications point to a rebound in August.
Retail sales fell 0.7% in July, marking the first monthly decline in four months. Sales decreased in eight of nine subsectors, with general merchandise retailers accounting for much of the weakness. Core retail sales, which exclude gasoline stations and motor vehicle dealers, also declined 0.7%.
The broad-based decline raised questions about the resilience of consumer spending amid higher borrowing costs and persistent inflation pressures. Sales also fell in key discretionary spending categories, including clothing and footwear retailers.
At the same time, the data included positive signs. Statistics Canada’s preliminary estimate suggested that retail sales increased 1.3% in August. While the figure remains subject to revision, it indicates consumer spending may have regained some momentum after a softer July.
For investors, the report offered another reminder that consumer spending remains an important indicator of economic health. Future retail sales releases will help determine whether July represented a temporary pause or the beginning of a broader slowdown in household spending.
Investing in quality, professionally managed and diversified investment funds can help you navigate changing interest-rate conditions. A diversified portfolio gives you access to different asset classes, geographies and investment styles, helping reduce the impact when one area of the market underperforms. Portfolio managers also have the expertise to adjust allocations as market conditions change. If you have questions or would like to review your plan, a Co-operators financial representative is always ready to help.
U.S. inflation and employment data (September 30 and October 2)
Markets will monitor two key U.S. economic reports this week for further insight into the inflation and interest rate outlook. On Wednesday, Personal Consumption Expenditures (PCE) price index data, the Fed’s preferred measure of inflation, will provide an update on underlying price pressures. On Friday, attention will shift to U.S. employment data for September, including non-farm payrolls and the unemployment rate. Both reports have the potential to influence expectations for the Fed’s future interest-rate decisions.
More important dates
- October 12: Canadian market holiday closure
- October 28: Bank of Canada interest rate decision
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The commentary in this report is based on current market conditions and market media sources available to the public and may change without prior warning at any time. The forecasts provided herein are not guarantees of future performance and include risks, uncertainty and assumptions. While Co-operators Financial Investment Services Inc. and Co-operators Life Insurance Company (“Co-operators”) believe these assumptions are reasonable, there is no guarantee they will be confirmed. This report is not a guarantee of future investment performance, nor should undue reliance be placed on this report. This report is provided as a general source of information for a specific point in time and should not be considered solicitation to buy or sell any investment. Nothing contained in this report constitutes investment, legal, tax or other advice. The content in this report should not be relied upon in making an investment or other decision, and individuals should obtain relevant and specific professional advice and read the terms and conditions contained in the relevant offering documents carefully before any investment decision is made. Co-operators is not responsible for any loss or damage as a result of reliance on the information contained in this report. Co-operators makes no representations or warranties as to the information contained herein and does not guarantee its accuracy, timeliness, completeness or usefulness.
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