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Canada loses 68,000 jobs, and the TSX jumps 1.5%

The day in one line: A bad Canadian jobs report on Friday made a Bank of Canada rate hike this month less likely, and the TSX rallied; Wall Street ended a winning week higher, too. Today the TSX is closed for Thanksgiving, US stocks are open, and the big test this week is US inflation on Wednesday.

What moved and why

1. A winning week for most of Wall Street. On Friday the S&P 500 rose 46.18 points, or 0.6%, to 7,811.54. The Dow gained 423.31 points, or 0.8%, to 51,654.95. The Nasdaq added 172.83 points, or 0.6%, to 27,366.17. The Russell 2000 of smaller companies rose 12.85 points, or 0.5%, to 2,806.98. For the week, the S&P 500 gained 1.2%, the Dow 0.9% and the Nasdaq 0.6%. The Russell 2000 lost 0.9%. The S&P 500 ended just shy of the record it set last Tuesday. Early this morning, S&P 500 futures were up about 0.3%.

2. A phone company sell-off. The day's worst performers were the big US wireless carriers. AT&T fell 10.82%, Verizon 10.14% and T-Mobile 11.70%. The trigger: SpaceX said late Thursday it is buying nationwide wireless airwaves (called spectrum) for its Starlink Mobile service. Investors now see SpaceX as a direct rival, not a partner. The deal still needs approval from the US Federal Communications Commission. Cell tower owners went the other way: Crown Castle rose 15.60% and American Tower 9.30%.

3. Delta cuts its outlook, blaming fuel. Delta Air Lines earned an adjusted US$1.72 a share in the third quarter, about 10% below what analysts expected. It cut its full-year profit outlook to US$5.10–5.60 a share, from US$6.50–7.50. The company says fuel will cost it about US$6 billion more this year. Its CEO, Ed Bastian, says demand is still strong. In plain terms: people are still flying, but jet fuel is eating the profit.

4. Americans feel gloomier. The University of Michigan's consumer sentiment index fell to 46.3 in early October, from 48.1 in September and below the 47.8 forecast. People also expect prices to rise faster: 4.7% over the next year, up from 4.6%.

5. Oil holds above US$90 as the Middle East heats up. November US crude settled up 36 cents at US$91.85 a barrel on Friday. This morning it is about US$92–93. Brent, the global benchmark, is around US$103–105 (sources differ). Two forces pull in opposite directions. Pushing prices up: Yemen's Houthi rebels, who are backed by Iran, struck Riyadh's main airport in Saudi Arabia again, and Iran called the US response on reopening the Strait of Hormuz "insufficient." Pushing down: President Trump said Friday that Russia will supply diesel to the US and world markets, and the US Treasury issued a licence easing sanctions on Russian diesel. Analysts quoted by AP doubt the deal will lower prices much. US diesel averages US$6.28 a gallon, per AAA.

6. Hurricane Isaias hits Florida, not the oil patch. Isaias came ashore Friday night near Destin, Florida, as a Category 2 hurricane. At least four people died and more than one million lost power at the peak, per Fox Weather. Before the storm, about 63% of Gulf of Mexico oil output had been switched off as a precaution. I found no reports yet of serious damage to oil platforms. Trading Economics says the US Energy Department approved an emergency loan of up to 4 million barrels from its strategic reserve to cover the gap.

Canada corner

TSX: closed today for Thanksgiving. No close to report for Monday.

Friday: a big rally on bad news. The S&P/TSX Composite rose 519.24 points to 35,664.62, a gain of about 1.5% (Trading Economics). That more than made up for Wednesday's sharp drop, and left the index up 0.9% for the week.

The jobs report. Canada lost 68,300 jobs in September, after losing 41,700 in August, Statistics Canada said. Economists polled by Reuters had expected a gain of about 9,200. The unemployment rate rose to 6.5% from 6.4%. Canada has now lost 41,200 jobs so far this year, compared with a gain of 211,300 in the same stretch of 2025. Young people were hit hardest: jobs for 15- to 24-year-olds fell by 48,000. Most losses came in health care, social assistance and education. Manufacturing lost 12,700. The share of adults working or looking for work fell to 64.8%, its lowest in 29 years outside the pandemic. Wages for permanent workers rose 2.3% from a year earlier.

Why stocks rose anyway. Markets no longer expect the Bank of Canada to raise its key rate on October 28. A December hike is still expected, according to Reuters. Royce Mendes of Desjardins thinks the Bank will hold this month, but warns that high energy prices could push up other prices this fall. Lower rate expectations helped banks: BMO rose 1.6%, Scotiabank and CIBC 1.3% each, TD 1.2% and RBC 1.1% (Trading Economics).

Biggest movers. Aritzia jumped 20.5% after its quarterly profit roughly tripled to C$201.7 million. Revenue rose 44% to C$1.17 billion, and US sales grew about 60%. It raised its full-year revenue forecast to C$4.78–4.88 billion. Gold miners rose with gold: Lundin Gold gained 10.5% after a record production quarter at its Fruta del Norte mine in Ecuador, Agnico Eagle 3.2%, and Barrick and Wheaton Precious Metals 2.9% each. Shopify rose 4.1%.

The loonie and rates. The Canadian dollar closed Friday at 70.07 US cents, down from 70.22 on Thursday. This morning it is near C$1.426 per US dollar, and about 2.6% weaker than a month ago (Trading Economics). Canada's 10-year yield fell to 3.88% on Friday from 3.93%. The US 10-year closed at 5.24%. The gap between them, about 1.36 percentage points by my arithmetic, keeps pulling money toward the US dollar.

Also noted. Trading Economics says Canada's economy was flat in July and grew 0.2% in August. It also notes renewed doubt about a US–Canada trade deal after Mr. Trump said Canada has been difficult to deal with.

One thing to understand: why bad news can be good news for stocks

On Friday, Canada lost 68,300 jobs, far worse than expected. The TSX jumped about 1.5%. Why would stocks rise on bad news?

The answer is interest rates. The Bank of Canada sets a key rate that affects mortgages, loans and savings. It raises the rate to cool prices, and holds or cuts it when the economy is weak.

Before Friday, traders thought the Bank might raise rates on October 28. Higher rates make borrowing costlier for families and companies, which can hurt profits. They also make safe savings and bonds more attractive compared with stocks.

The weak jobs report made a hike less likely. So bond yields fell, and stocks that are sensitive to rates, such as banks, rose.

This is sometimes called a "bad news is good news" day. It does not last forever. If job losses keep piling up, people spend less, profits fall, and bad news becomes plain bad news for stocks too. The question for investors is which effect wins over the coming months.

On the calendar

All times Eastern (Pacific in brackets).

Today (Monday, October 12)

Tuesday, October 13

Wednesday, October 14

Thursday, October 15

Friday, October 16

Next week: Canada's September inflation (CPI) and the Bank of Canada's Business Outlook Survey, both Monday, October 19. Bank of Canada decision, October 28. Federal Reserve decision, October 28–29.

Sources

This newsletter is general information, not investment advice.

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