The S&P 500 and Nasdaq closed lower on Friday after touching record highs during the session, with high-flying chip stocks going into reverse. Canada’s main stock index also ended lower, but still notched its fourth straight weekly gain, as bigger-than-expected U.S. and Canadian jobs gains bolstered prospects of a soft economic landing.
The S&P and Nasdaq briefly hit intraday record highs but started to lose steam late morning. The Philadelphia Semiconductor Index sharply underperformed and ended the day down 4% after touching an intraday record high.
Artificial intelligence chip darling Nvidia closed down 5.6% to snap a six-session winning streak. Early in the session it had been up more than 5%.
In the chip index, Broadcom sank 7% after its full-year forecast failed to impress investors and Marvell Technology tumbled 11.4% after it forecast first-quarter results below market expectations on soft demand.
Stocks had opened higher after data showed U.S. job growth accelerated in February, with nonfarm payrolls increasing by 275,000 jobs against an expected 200,000 rise. January jobs numbers were revised lower. Also, the unemployment rate rose to 3.9% in February after holding at 3.7% for three straight months, while wage growth slowed to 0.1% on a monthly basis.
“Today is just profit taking,” said Brian Price, head of investment management for Commonwealth Financial Network who described the week as “a microcosm of the year so far” with modest pull backs and buyers stepping in.
Price pointed to some signs of consumers spending more cautiously, with Costco Wholesale shares closing down 7.6% as quarterly sales fell short of estimates due to tepid demand for higher-margin goods.
But Price said “the general bias right now is for the market to continue to move higher, absent negative catalysts.”
“That’s really what the market is hanging its hat on right now, that inflation is going to continue to be benign, that the Fed is going to start to ease.”
Next week’s U.S. February data including consumer prices (CPI) and retail sales will offer more cues on the prospects for potential rate cuts.
On Thursday, Federal Reserve Chair Jerome Powell said the central bank was “not far” from gaining the confidence inflation is falling sufficiently to begin cutting interest rates.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 57.03 points, or 0.3%, at 21,737.53, after posting on Thursday its highest closing level in nearly two years.
For the week, the index was up 0.9%. The weekly winning steak was the longest since April 2023.
“The U.S. still seems very much on course for a soft landing. In Canada, it’s a little bit more nuanced I think, but by all indications the market is holding up relatively well,” said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth.
Canada’s economy added 40,700 jobs in February, double the expected gain but and wage growth slowed for a second consecutive month as the central bank continues to hold interest rates at a 22-year high.
The TSX energy sector fell 0.7% as oil settled 1.2% lower at US$78.01 a barrel and shares of uranium miners declined. Nexgen Energy Ltd lost 8.7% and Cameco Corp was down 6.2%.
Consumer-related stocks also lost ground, with the consumer staples sector falling 1% and consumer discretionary ending 0.4% lower.
The TSX materials index edged up 0.2% as gold added to its record-setting rally.
“Despite gold being at an all-time high, despite the geopolitical uncertainty, the resource sector, which is a big driver, hasn’t really taken off. That’s impeding the TSX’s progress a little bit,” Picardo said.
The Dow Jones Industrial Average fell 68.66 points, or 0.18%, to 38,722.69, the S&P 500 lost 33.67 points, or 0.65%, to 5,123.69 and the Nasdaq Composite lost 188.26 points, or 1.16%, to 16,085.11.
The biggest loser among the S&P 500′s 11 major sectors was technology, which ended down 1.8%, followed by consumer staples, which fell 0.8%, with a big drag from Costco.
For the week the S&P 500 lost 0.26% while Nasdaq fell 1.17% and the Dow dropped 0.93%.
The biggest gainer was real estate, which closed up 1.1% followed by energy, which added 0.4%.
Also on the bright side, Gap shares finished up 8.2% after the retailer beat Wall Street expectations for fourth-quarter results, buoyed by strong demand on improved product offerings at its Old Navy and namesake brands during the holiday season, and lower markdowns.
Advancing issues outnumbered decliners by a 1.25-to-1 ratio on the NYSE where there were 708 new highs and 48 new lows. On the Nasdaq 2,086 stocks rose and 2,192 fell as declining issues outnumbered advancers by about a 1.05-to-1 ratio. The S&P 500 posted 65 new 52-week highs and no new lows while the Nasdaq recorded 351 new highs and 83 new lows. On U.S. exchanges 12.29 billion shares changed hands compared with the 12.08 billion average for the last 20 sessions.
Reuters, Globe staff