S&P/TSX composite down 1.2 per cent Thursday, U.S. stock markets mixed

Canada’s main stock index lost 1.2 per cent on Thursday, weighed down by losses in the energy, financial and base metal sectors, while U.S. markets were mixed.

The S&P/TSX composite index closed down 263.44 points at 21,698.11.

In New York, the Dow Jones industrial average was down 65.11 points at 38,647.10. The S&P 500 index was up 12.71 points at 5,433.74, while the Nasdaq composite was up 59.13 points at 17,667.56.

On Thursday, a report on U.S. wholesale inflation came in weaker than expected, one day after consumer inflation for May was also lower than forecast.

The economic data puts a second interest rate cut in the U.S. this year back on the table, said Allan Small, senior investment adviser at iA Private Wealth.

Wednesday, on the heels of the CPI report, the U.S. Federal Reserve held its key rate steady and released a hawkish forecast of just one cut this year.

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“We’ll need to see more good data to bolster our confidence that inflation is moving sustainably toward two per cent,” said chair Jerome Powell at a press conference.

“We welcome today’s (inflation) reading and hope for more like that.”

The Fed needs to see a pattern of lower inflation before it starts cutting, said Small.

“The Fed made no comment about a rate cut any time soon,” he said. “I think it’s just going to depend on how quickly, if at all, the U.S. economy deteriorates.”

“They just go by the data,” he added.

If the Fed cuts in September, though, the odds are good for a second one in December, said Small.

Meanwhile in Canada, many market watchers expect three or four cuts by the end of the year, he added.

The tech sector led the day in U.S. equity markets, noted Small, with chipmaker Broadcom gaining 12.3 per cent after reporting stronger-than-expected profits for the latest quarter. Nvidia gained 3.5 per cent.

“It just seems like no matter what seems to happen out there, anything to do with artificial intelligence, semiconductors, chips, just continues to drive (tech) higher,” said Small.

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Both the Nasdaq and the S&P 500 set new records on Thursday.

The July crude oil contract was up 12 cents at US$78.62 per barrel and the July natural gas contract was down nine cents at US$2.96 per mmBTU.

The August gold contract was down US$36.80 at US$2,318.00 an ounce and the July copper contract was down nine cents at US$4.48 a pound.

The Canadian dollar traded for 72.75 cents US compared with 72.99 cents US on Wednesday.

— With files from The Associated Press

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