After a triple-digit pullback Tuesday, the S&P/TSX composite index closed up 59.66 points at 15,110.47 after adjusted earnings from both the Bank of Montreal (TSX:BMO) and National Bank (TSX:NA) surprised on the upside and both raised their quarterly dividend.
Allan Small, senior adviser at HollisWealth, said people have been "bashing the banks ... wondering, 'Where are the banks going to continue to make money from?'" in a low interest rate environment.
"But I think what these people fail to understand is that the banks now are moving into more of a wealth management style or model for themselves," he said, noting how BMO talked up capital markets and wealth management business in its earnings report.
"Charging that flat fee for a customer's portfolio is a great thing ... and I think that bodes well for their earnings this quarter and, going forward, the banks will be just fine."
The energy sector was the biggest drag on the TSX, down 0.73 per cent as the July oil contract retreated further from the $60-a-barrel mark, down 52 cents at US$57.51. June gold slid $1.30 to US$1,185.60 an ounce.
Meanwhile, the loonie lost 0.21 of a U.S. cent to 80.26 cents as the Bank of Canada announced its key interest rate would remain at 0.75 per cent and looked to remain there for some time. That was its lowest close since finishing at 80.06 cents on April 14.
Wall Street also bounced back smartly, with the Dow Jones industrial average up 121.45 points at 18,162.99, erasing much of its 190-point decline the previous session.
The tech-heavy Nasdaq, meanwhile, shot up a remarkable 73.84 points to a record close of 5,106.59, while the S&P 500 advanced 19.28 points to 2,123.48 and not far off its previous all-time high close of 2,130.82 last Thursday.
Again, people shouldn't be surprise by such "choppiness," Small said, noting that on any given day market direction will depend on whether traders, especially high-frequency traders, focus on the positive or the negative.
"So (one day) the news out of Greece, people will think it's a good thing and buy up the market and all of a sudden they might think it's a bad thing and sell off the market."
As well, for the past few years investors have had a "buy-the-dip mentality," he said. So, if markets go down 100 or 200 points one day, very often traders will come in and buy that dip the next.
The point being that with interest rates so low and equities fairly valued, investors don't have any choice but to be in the market, he said.
"We call it Tina: there is no alternative."Suggest a correction