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In New York, the Dow Jones industrial average was down 696.75 points at 41,938.45.  while the Nasdaq composite was down 317.25 points at 19,161.63. The S&P 500 index was down 91.21 points at 5,827.04.

Fresh labour market data in both Canada and the U.S. came in hotter than expected Friday. 

For Canada, that’s good news, said Ilana Schonwetter, investment advisor and portfolio manager at Blueshore Financial. 

The Canadian labour market added 91,000 jobs in December and the unemployment rate dipped to 6.7 per cent. 

However, the Bank of Canada will need to see more than one month of positive change, she said. 

“I think that we will need to see another two or three prints to see whether or not there has been a stabilization in that unemployment number or whether it was just an anomaly for that one month.�

The Bank of Canada has been cutting interest rates aggressively, said Schonwetter, as the economy and labour market have faltered under higher rates. It’s expected to continue cutting in 2025. 

Despite the positive surprise, Canadian markets were dragged lower Friday because of U.S. equities, which were reacting to their own country's labour market report. 

U.S. job growth rose in December, while unemployment declined to 4.1 per cent. 

In the U.S., stronger-than-expected data falls into the “good news is bad news� category right now, said Schonwetter. 

With the U.S. Federal Reserve having already halved its forecast for interest rates in 2025 due to a resilient economy and jobs market, investors sold off in anticipation of potentially even fewer cuts than the two the bank projected last month. 

“The core around the sell off today is really around that jobs report, and the consequences of that in the actions of the Federal Reserve,� said Schonwetter. 

“It definitely gives them less reason to act.�

Schonwetter said Canadian and U.S. economic data and interest rate policies are expected to continue diverging in 2025. 

“The Bank of Canada is absolutely in a much tougher spot,� she said. 

“If you think about the level of debt that is being carried by Canadians, the number of mortgages that are coming up for renewal, and then, of course, the potential of tariffs ... the uncertainty around all of this backdrop is quite unsettling for the Canadian investor.�

The Canadian dollar traded for 69.34 cents US compared with 69.47 cents US on Thursday.

The February crude oil contract was up US$2.65 at US$76.57 per barrel and the February natural gas contract was up 29 cents at US$3.99 per mmBTU.

The February gold contract was up US$24.20 at US$2,715 an ounce and the March copper contract was down a penny at US$4.30 a pound.

— With files from The Associated Press

This report by °µÍø½ûÇø was first published Jan. 10, 2025.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)