04:15 PM EDT, 08/13/2024 (MT Newswires) -- The Toronto Stock Exchange' closed higher for a fourth-straight session on Tuesday, following U.S. markets higher as technology issues continue to recover and a key U.S. inflation measure eased, firming hopes for the stimulus of U.S. interest-rate cut.

The S&P/TSX Composite Index closed up 219.25 points to close at 22,618.18. Information Technology and Battery Metals were the biggest gainers on the day, up 2.2% and 1.8% respectively. Telecoms was the biggest decliner, down -0.31%.

Gold traded at a record high mid-afternoon on Tuesday as the dollar and treasury yields weakened after a U.S. inflation measure rose less than expected last month. Gold for December delivery was last seen up US$2.20 to US$2,506.20 per ounce, above the record US$2,505.40 set on July 18.

West Texas Intermediate (WTI) crude oil closed lower on Tuesday following five days of gains despite continuing Middle East tensions and a lower-than-expected rise in a key U.S. inflation measure as the International Energy Agency said it expects weak demand growth this year and next as China's economy struggles. WTI crude oil for September delivery closed down US$1.71 to settle at US$78.35 per barrel, while October Brent crude, the global benchmark, closed down US$1.61 to US$80.69.

The U.S. Bureau of Labor Statistics reported the July Producer Price Index (PPI) rose 0.1% from June, under expectations for a 0.2% monthly rise, according to Marketwatch. Core PPI, excluding volatile items, was flat from the prior month, while the consensus estimate expected a 0.2% monthly rise.

The data further raises expectations the Federal Reserve will begin cutting interest rates from a current 23-year high at the September meeting of its policy committee as inflation slows nearer to its 2% target. However Wednesday's release of the July Consumer Price Index will be closely watched. The index is expected to show inflation running at a 3% annualized rate.

Reflecting the renewed positive sentiment on North American equity markets, Wells Fargo Investment Institute today published a note titled 'What equity investors should look for as rate cuts near'. Given that Canada is already on its rate cutting path, it will be of interest to stock pickers here that WFII noted when the U.S. Federal Reserve cuts in response to falling inflation, equities have "performed well."

"Historically," WFII said, "the reason the Fed begins to ease policy has been important to equity-market performance. Since 1974, the average drawdown has been roughly 20% over the 250 days following the first Fed rate cut. However, the average includes several bear markets associated with economic and earnings recessions - a scenario we view as unlikely in 2025. Digging a little deeper into the data reveals a much different picture in non-recessionary periods."

"Historically," it added, "the index has continued its upward trajectory 18 months past the initial cut in periods when the Fed easing cycle did not correspond with a recession. Alternatively, when the Fed rate cut cycle did not correspond with a recession performance was choppy before ending essentially flat over the 18-month period."

On what it may mean for investors, WFII's view is that the Fed will reduce rates in September as it shifts from fighting inflation to stimulating the economy and hiring, a scenario that has historically corresponded with equities performing well.

"While a recession is possible," it said, "our work suggests a greater likelihood of a near-term economic slowdown, followed by a recovery in 2025."