Wall Street Rallied After the Fed Hike. The TSX Followed, But Lagged the Nasdaq by More Than Half a Point.

North American equity markets rallied together as bond yields pulled back from a multi decade high, though the size of the gain varied sharply from index to index. Photo: iStock.

Market

Wall Street Rallied After the Fed Hike. The TSX Followed, But Lagged the Nasdaq by More Than Half a Point.

Sep 18, 2026 5 min The Market Desk

The Brief

All four major indices closed higher Thursday, TSX +1.04%, S&P 500 +1.14%, Dow +0.62%, Nasdaq +1.69%, as Treasury yields pulled back from a 19 year high.
The Fed hike still points higher, with 16 of 18 officials projecting at least one more increase before year end, a signal markets absorbed calmly after the initial shock.
Materials and technology led the TSX, with base metal miners and tech names outpacing the broader index, keeping pace with gold near record levels.
Canadian bond yields eased too, as the 5 year Government of Canada yield fell to 3.53 percent Thursday, a move that flows directly into fixed mortgage pricing.
The lag against the Nasdaq is the story for Canadian portfolios, a 65 basis point gap in a single session, on a day the Canadian dollar was already near a six week low.

All four major North American indices closed higher Thursday. The TSX Composite gained 1.04 percent to 35,859.77, the S&P 500 rose 1.14 percent to 7,637.72, the Dow added 0.62 percent to 51,779.85, and the Nasdaq Composite led with a 1.69 percent gain to 26,418.30. The move came as Treasury yields retreated from their highest level since 2007, easing the pressure that had driven a broad selloff in the prior session after the Federal Reserve raised its policy rate.

The Fed Hike Still Points Higher

The relief was not about the Fed turning dovish. The September rate increase, to a target range of 3.75 to 4.00 percent, passed on a unanimous vote, and updated projections show 16 of 18 officials expect at least one further hike before year end. What moved Thursday was narrower than that: Treasury yields had spiked to a 19 year high in the immediate aftermath of the decision, and their retreat, not a change in the rate outlook itself, was enough to bring buyers back in.

All four major indices closed higher Thursday, led by the Nasdaq at 1.69 percent, while the TSX gained 1.04 percent, a spread that says something about where the appetite for risk is concentrated right now.

INDICES: DAILY PERCENT CHANGE +1.04% ▲ TSX DAILY | SEP 17, 2026

Source: TMX Group, NYSE, Nasdaq, Trading Economics daily close data, September 17, 2026. | hdq.ca

All four indices closed higher Thursday as Treasury yields retreated from a multi decade high reached in the immediate aftermath of the Federal Reserve rate decision. Source: TMX Group, Trading Economics daily close data.

Materials and Technology Did the Work in Canada

Base metal miners and technology names led the TSX advance, keeping pace with gold, which has traded above 4,300 dollars an ounce through September after topping 4,690 dollars in late August. The Government of Canada 5 year bond yield eased to 3.53 percent Thursday, a 13 basis point move that flows directly into fixed mortgage pricing for anyone renewing in the coming months. The 65 basis point gap between the TSX and Nasdaq gains in a single session is not large enough to signal a trend on its own, but it lands on a day when the Canadian dollar was already trading near a six week low against the US dollar, and it is worth watching whether Canadian equities keep pace if the rally continues.

Sources

TheStreet, Bloomberg News, Trading Economics, TMX Group, Investing.com, Federal Reserve

Educational content only. This article is published for informational and professional development purposes. It does not constitute investment advice, financial planning advice, or a recommendation to buy or sell any security. Canadian advisors should apply their own professional judgment. Full disclaimer.

Advisor Toolkits — Sep 18, 2026

🛡️ Respond ▼

What They're Feeling

Relief after a volatile week, but also a nagging sense that the rally does not fully make sense given the Fed just raised rates and signalled more increases are likely.

What to Say

Thursday was a genuinely good day across the board, and I want to be clear about why. It was not the Fed turning friendlier. Officials still expect at least one more increase this year. What moved markets was bond yields pulling back from an extreme level reached right after the hike. The TSX participated, up about one percent, though the Nasdaq moved further. Nothing about today changes the plan we set, but it is a good reminder that a strong day and a change in direction are not the same thing.

Who's Affected

High impact: Clients renewing a mortgage soon, since the Government of Canada 5 year yield move Thursday flows directly into fixed rate pricing.

Mixed impact: Clients heavily weighted to US technology names, who captured the largest single day gain, against clients weighted to Canadian financials and industrials, who lagged.

Potential benefit: Clients holding Canadian gold and base metals names, which have kept pace with the broader rally while gold trades near record levels.

Action Checklist

Confirm clients renewing a mortgage understand the recent move in the Government of Canada 5 year yield

Review whether portfolio weighting between Canadian and US equities still matches each client goal

Watch upcoming Fed commentary for confirmation of the 16 of 18 hike projection

Follow-Up Email Template

Subject: Why Markets Rallied After a Rate Hike

Hi [Client Name],

Thursday was a strong day across North American markets, with the TSX up about one percent and the Nasdaq leading with a gain of nearly 1.7 percent. This happened two days after the Federal Reserve raised interest rates, which might seem like a contradiction.

The short explanation is that bond yields had spiked to an extreme level right after the Fed decision, and Thursday brought a pullback in those yields, not a change in the rate outlook itself. Officials still expect at least one more increase this year.

Nothing about this changes your plan, but I wanted you to understand the mechanism behind the headline rather than just the headline itself.

[Your Name]

This communication is for educational purposes only and does not constitute personalized investment advice.

🎯 Prospect ▼

Client Profiles to Target

DIY investors who sold or reduced equity exposure around the Fed decision and may now be watching from the sidelines as markets recover.

Opening Line

I am reaching out because markets had a strong rally this week right after the Fed raised rates, which trips up a lot of self directed investors who expect a hike to be bad news for stocks in a straight line.

Value Proposition

A self-directed investor who reacted to the Fed headline rather than the underlying mechanism, bond yields spiking and then retreating, likely made a decision this week that a framework built around headlines rather than mechanisms would not have supported. An advisor who can explain why a hike and a rally happened in the same week is offering a level of interpretation a headline alone cannot provide.

Discovery Questions

Did you make any portfolio changes around this week Fed decision

How do you currently decide when a rate move is good or bad news for your holdings

Are you comfortable with your current split between Canadian and US equity exposure

Prospecting Email Template

Subject: Why Stocks Rallied Right After the Fed Hike

Hi [Name],

If you found this week confusing, you are not alone. The Federal Reserve raised interest rates on September 16, and two days later every major North American index closed higher, with the Nasdaq leading the way.

The move made sense once you understood what actually happened with bond yields, not just the headline rate decision. I would be glad to walk through the mechanism and how it applies to a self-directed portfolio.

[Your Name]

This communication is for educational purposes only and does not constitute personalized investment advice.