Losses in industrial, utility and financial stocks weighed on the Toronto stock market as Canada’s main stock index fell more than 100 points Tuesday, while U.S. stock markets were mixed.
The S&P/TSX composite index closed down 108.33 points at 22,265.05.
In New York, the Dow Jones industrial average was down 216.73 points at 38,852.86. The S&P 500 index was up 1.32 points at 5,306.04, while the Nasdaq composite was up 99.09 points at 17,019.88.
A handful of large tech stocks helped pull the S&P 500 and Nasdaq higher, including chipmaker Nvidia, which rose seven per cent.
As Wall St. returned from a long weekend, the latest report on U.S. consumer confidence seemed to cause a pullback in equities, said Kevin Headland, chief investment strategist at Manulife Investment Management.
The report showed consumer confidence rose in May after three months of declines, a surprise for economists expecting another step lower.
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Continued strength in the U.S. economy supports a “higher for longer” narrative for interest rates, said Headland.
“It seems like the market is paying a lot of attention to each data point that comes in from an economic perspective,” he said.
Expectations for how many times the U.S. Federal Reserve could cut in 2024 have come down significantly, he added, with September or perhaps even November being eyed for a first cut.
“The economy remains resilient, inflation is slowing down, but the resilience of the economy has afforded (the central bank) the time to wait to ensure inflation is actually under control,” said Headland.
This week will see more economic reports in the U.S., including GDP and the Personal Consumption Expenditures index.
While investors would welcome any surprises to the downside on those reports, the Fed wants to see a pattern of cooling before it starts cutting rates, said Headland.
And markets will continue to pay close attention to each economic report, he added.
In Canada, where inflation has come down much faster, cuts could come as soon as next month. But the Bank of Canada is unlikely to deviate too much from the Fed, said Headland, instead cutting carefully and slowly.
Scotiabank reported lower earnings for its latest quarter, as a rising strain in auto loans and mortgages led the bank to set aside more money for potentially bad loans.
The Canadian dollar traded for 73.32 cents US compared with 73.34 cents US on Monday.
The July crude oil contract traded for US$79.83 per barrel, up US$2.11 from its settlement price Friday, and the June natural gas contract traded for US$2.59 per 1,000 cubic feet, up seven cents from Friday.
The June gold contract was up US$22 from its Friday settlement price to trade for US$2,356.50 an ounce, while the July copper contract was up 11 cents from Friday at US$4.86 a pound.
— With files from The Associated Press
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