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Wall Street ended mixed on Thursday as a selloff in Salesforce weighed on the Dow, while traders digested U.S. data that suggested the Federal Reserve’s interest rate hikes are working. The TSX was modestly higher, ending at its highest level in nearly six months, as Canadian investors took in the latest bank earnings - including a big miss from CIBC that sent its shares down more than 7%.

On Wednesday, the S&P 500 surged over 3% on optimism the Fed might moderate its campaign of interest rate hikes.

U.S. manufacturing activity shrank in November for the first time in 2-1/2 years as higher borrowing costs weighed on demand for goods, data showed, evidence the Fed’s rate hikes have cooled the economy.

The personal consumption expenditures (PCE) price index rose 0.3%, the same as in September, and over the 12 months through October the index increased 6.0% after advancing 6.3% the prior month.

Excluding the volatile food and energy components, the PCE price index rose 0.2%, one-tenth less than expected, after gaining 0.5% in September.

“On a normal day, the package of data this morning would be pretty risk-on, but after the rally yesterday, I think it’s not quite good enough to push another leg higher,” said Ross Mayfield, an investment strategy analyst at Baird.

Wednesday’s rally drove the S&P 500 index above its 200-day moving average for the first time since April after Fed Chair Jerome Powell said it was time to slow the pace of interest rate hikes.

Traders now see a 79% chance the Fed will increase its key benchmark rate by 50 basis points in December and a 21% chance it will hike rates by 75 basis points.

Meanwhile, chances that the Bank of Canada would hike by 50 basis points rather than 25 basis points at a policy decision next Wednesday have fallen to roughly 10% from 30% since Powell’s comments this week, money market data showed.

Bond yields have been trending lower since Powell’s remarks, and on Thursday, the benchmark 10-year U.S. note was down 19.4 basis points to 3.507%.

Higher interest rates have been particularly damaging for high growth sectors such as technology, lowering the value to investors of the future cash flows that companies in the sector are expected to produce.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 72.19 points, or 0.4%, at 20,525.45, its highest closing level since June 9.

The Toronto market’s technology sector gained 2.8%, while the materials group, which includes precious and base metals miners and fertilizer companies added 1.8% as the price of gold climbed above $1,800 per ounce.

Canadian Imperial Bank of Commerce, Bank of Montreal and Toronto-Dominion Bank joined their bigger peers in setting aside more money to cover potential loan defaults by inflation-hit customers.

CIBC fell 7.7%, while BMO rose 1.2% and TD Bank ended 2.6% higher.

Energy was a drag, falling 1.2% even as easing of COVID-19 curbs in China helped bolster oil prices. U.S. crude oil futures settled 0.8% higher at $81.22 a barrel.

On Wall Street, Salesforce Inc tumbled 8.3% after the software maker said Bret Taylor would step down as co-chief executive officer in January.

Dollar General Corp fell 7.5% after the discount retailer cut its annual profit forecast, while Costco Wholesale Corp dropped 6.6% after the membership-only retail chain reported slower sales growth in November.

The S&P 500 declined 0.08% to end the session at 4,076.79 points.

The Nasdaq gained 0.13% to 11,482.45 points, lifted by gains of over 1% each in Nvidia and Facebook-owner Meta Platforms.

Dow Jones Industrial Average declined 0.56% to 34,396.53 points, pulled lower by Salesforce.

Of the 11 S&P 500 sector indexes, seven declined, led lower by financials, down 0.71%, followed by a 0.47% loss in consumer staples.

Investors now await nonfarm payrolls data on Friday for clues about how rate hikes have affected the labor market.

With a month left in 2022, the S&P 500 is down about 14% year to date, and the Nasdaq has lost about 27%.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.1-to-one ratio. The S&P 500 posted 32 new highs and no new lows; the Nasdaq recorded 118 new highs and 91 new lows. Volume on U.S. exchanges was relatively heavy, with 11.7 billion shares traded, compared to an average of 11.3 billion shares over the previous 20 sessions.

Reuters, Globe staff

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