Canada’s benchmark stock index finished the trading day up triple digits as financial and industrials all helped lifted the index higher.

The S&P/TSX Composite Index closed up 342.09 points at 18,937.71.

Shares of West Fraser Timber Company Ltd. soared 14.72 per cent after Reuters reported that the lumber giant could be a target for a takeover. 

RCVC Capital and European-based Kronospan have shown a joint expression of interest to acquire West Fraser, according to the report.

In a statement issued Tuesday afternoon, West Fraser said that although it met with CVC and Kronospan in the past, it has not received a proposal and there are no ongoing discussions with those parties.

A spokesperson for CVC Capital declined to comment when reached by BNN Bloomberg. Representatives for Kronospan did not immediately respond to requests for comment.

Shares of Air Canada finished the trading day up 4.31 per cent after a Citigroup Inc. analyst cut his price target to $19 from $25.50, but maintained a neutral rating for Canada’s largest airline.

“I think it's a good long-term signal that we are seeing some capacity move out of cargo and back to its home in the passenger segment, but on a short-term basis there have been a lot of challenges in dealing with flight delays and cancellations,” Citi Analyst Stephen Trent said in an interview on Tuesday.

The S&P 500 posted its biggest one-day gain since June 24, with all 11 industry groups finishing the trading day higher. The S&P rose 2.76 per cent, the Dow Jones Industrial Average was up 2.43 per cent, and the tech-heavy Nasdaq gained 3.11 per cent.

Netflix reported its second consecutive quarter of subscriber losses for the first time in history as the streaming platform faces growing competition for original content.  

The tech company said it lost 970,00 paid subscribers in the second quarter, while profits beat expectations and revenue came in lower than analysts expected at 8.6 per cent.

Meanwhile, while all eyes have been on inflation in recent months, one portfolio manager believes that the worst of it might be behind us. 

“Inflation data is backwards looking, and if we look at the concurrent data, looking at energy prices, metal prices, food prices, many of these commodities have come off quite bit from their recent highs,” Jason Del Vicario, portfolio manager at Hillside Wealth Management, iA Private Wealth, said in an interview Tuesday.

Del Vicario added that higher interest rates have also helped dampen the country’s housing market and frustrated lending conditions.

“While central banks have been late to raising rates, the desired effects of raising rates, which of course is to slow economic activity, slow inflation, I think it is certainly having the intended effect,” he said.

INVESTORS CUT EXPOSURE TO RISK ASSETS

Investors remain on alert for signs that high inflation and monetary tightening are squeezing consumers and employment, with allocation to stocks plunging to levels last seen in October 2008 and exposure to cash surged to the highest since 2001, according to the latest Bank of America Corp.’s monthly fund manager survey.

“Earnings, so far, there’s been some caution and there’s been a little bit of dialing down of expectations, but I don’t think the worst-case scenarios are really in play anymore,” Shawn Cruz, head trading strategist at TD Ameritrade, said in an interview. “We’v

Despite the market optimism, investors have turned more cautious with their risk appetite, according to a recent survey from the Bank of America.

The BoA released a fund manager survey that suggested “full capitulation” had occurred as the outlook for global economic growth and profits among respondents sank to all-time lows, while cash levels were sitting at the highest level since 2001, and allocation to equities was at the lowest since Lehman Brothers collapsed in 2008.

BofA said 259 respondents with US$722 billion in assets under management participated in the survey, which was conducted from July 8-15.

“Sentiment is not a very good timing indicator, but it does give a good background. It doesn't mean that the markets are all of a sudden going to rally this week or even next week,” Brooke Thackray, research analyst at Horizons ETF Management Canada, said in an interview Tuesday in response to the survey. 

“Sentiment is a very general indicator but it does say that there could be room for a pop in the market if things start to change.”

“It does bode well for the market that so much cash is sitting on the sidelines but I'm not convinced that we're going to see that actually happen in the next week or two,” said Thackray.

The benchmark West Texas Intermediate crude oil price closed up Tuesday at US$104.22 per barrel. The Canadian dollar climbed to 77.69 U.S. cents.