As of February 2, 2026, the Canadian and U.S. markets are showing resilience despite early-year volatility. According to the latest analysis from BNN Bloomberg, the bull market case has been significantly strengthened by robust fourth-quarter earnings and record profit margins.
For investors and first-time home buyers in Ontario watching the economy, this stability in corporate Canada and the U.S. provides a more predictable backdrop for financial planning.
The Earnings “Party”: Beating Expectations
Despite a “wobbly” start to February, the fundamental data is overwhelmingly positive. Approximately one-third of S&P 500 companies have reported, revealing two major trends:
- Accelerated Growth: Aggregate earnings growth is currently at nearly 12% year-over-year, shattering earlier analyst expectations of just 4%.
- Record Profit Margins: Profit margins are hitting all-time record highs, reaching levels not seen since 2009.
The Great Rotation: Moving Beyond Big Tech
The narrative of 2023–2025 was dominated by the “Magnificent Seven.” However, 2026 marks a significant sector rotation where the “other 493” companies are leading the charge.
- Industrial Strength: The industrials sector is a surprise leader, with earnings up 15% year-over-year (compared to expectations of flat growth).
- Equal-Weight Success: In January 2026, the equal-weight S&P 500 outperformed the price-weighted index (up 3.5% vs. 1.5%), signaling a healthier, more balanced bull market.
Impact on Interest Rates and the Fed
Market volatility in early February was largely tied to uncertainty regarding the next Fed Chair, with Kevin Warsh emerging as a potential candidate.
- Hawkish Concerns: While the market still expects two rate cuts, there are reservations that new leadership might be more “hawkish” (keeping rates higher for longer) than previously anticipated.
- Bond Market Influence: This uncertainty directly impacts lowest mortgage rates in Canada and refinance mortgage Canada opportunities, as fixed rates often move in tandem with bond yields influenced by Fed sentiment.
Commodities: The “Rubber Band” Snap
Following a massive rally in 2025, precious metals saw a “sell-first, ask-questions-later” crash in late January/early February.
- Gold & Silver: Gold was up 25% for the year before a violent pullback. However, analysts suggest we remain in a commodity supercycle with years of growth left.
- Industrial Metals: Copper and other industrial metals continue to hit new highs, supported by a strong global economy.
What the “January Barometer” Tells Us
Historically, if January ends in the green as it did in 2026 the following 11 months are higher 87% of the time, with an average gain of 12%. While February is prone to short-term pullbacks, the “cherry on top” of record margins and earnings suggests a positive year ahead.
Strategic Takeaways for Ontario Investors
- Real Estate Investment Toronto: A strong earnings environment typically supports employment. However, with the Toronto unemployment rate at 8.7%, investors should focus on high-yield sectors and properties that benefit from the industrial boom.
- Best Mortgage Rates Ontario: As the market adjusts to Fed leadership rumors, keep a close eye on fixed rates. Stability in earnings may allow the Bank of Canada to remain patient with its current 2.25% overnight rate.
- Credit Building: For those using credit cards to build credit, the positive market outlook suggests a stable environment to manage debt-to-income ratios and prepare for future lending.
For more updates on how global earnings impact home equity lines of credit in Ontario and local market trends, stay tuned to barhoot.com.
