Tech Stocks Shine as Markets Rally on Hormuz Optimism

Canada's main stock index and its US counterparts rose sharply on Tuesday as investors put aside concerns about a frothy tech market and grew cautiously optimistic that the Strait of Hormuz could soon reopen.

The S&P/TSX composite index surged 575.45 points to 35,801.59, propelled by gains in the technology and base metals sectors. In New York, the Dow Jones industrial average jumped 907.47 points to 54,085.88, while the S&P 500 index rose 136.02 points to 7,736.52, and the Nasdaq composite soared 671.10 points to 26,584.99.

Dustin Reid, chief strategist for fixed income at Mackenzie Investments, attributed the rally to tech shares having a very strong day and investors feeling positive about Iran and Oman's negotiations to open the Strait of Hormuz. Tech stocks have been under scrutiny lately due to concerns over their valuations, but Tuesday was a different story.

The Canadian dollar traded for 71.08 cents US, compared with 71.28 cents US on Friday, while the September crude oil contract fell US$4.57 to US$75.77 per barrel. The December gold contract rose US$62.10 to US$4,152.60 an ounce.

Reid noted that investors seem more optimistic about this deal than previous ones and that a breakthrough could lead to market euphoria. However, he cautioned that the market's direction would depend on what happens in the Middle East conflict.