Canada’s main stock index fell on Monday as a drop in oil prices weighed on energy stocks, with the move in energy offsetting gains for high-dividend paying utilities stocks ahead of a potential Bank of Canada interest rate cut this week. The S&P 500 and Nasdaq edged higher, as investors monitored soft U.S. manufacturing sector data and a glitch on the NYSE that briefly caused trading halts in dozens of equities.
The S&P/TSX composite index ended down 152.43 points, or 0.68%, at 22,116.69.
The price of oil settled 3.6% lower at US$74.22 a barrel as investors worried about the demand outlook and took a complicated OPEC+ output decision as a sign that members of the producer group were eager to export more crude.
The energy sector, which accounts for 20% of the Toronto market’s weighting, lost 4.42% and industrials ended 0.84% lower.
Financials also lost ground, falling 0.3%.
The utilities sector added 0.50% and real estate, which like utilities could particularly benefit from lower interest rates, ended 0.70% higher.
Those moves were encouraged by lower bond yields Monday in both the U.S. and Canada, with the Canadian five-year bond yield down nearly 10 basis points. Benchmark U.S. Treasury yields fell to a two-week low after data showed that U.S. manufacturing activity slowed for a second straight month in May, boosting expectations that a softening economy may allow the Federal Reserve to cut interest rates later this year.
Manufacturing weakened as new goods orders dropped by the most in nearly two years, while a measure of input inflation fell back from the highest since mid-2022.
U.S. construction spending also fell unexpectedly for a second consecutive month in April on declines in non-residential activity.
“On the one hand, this (manufacturing data) is another survey that seems to show pessimism and weaker economic activity. On the other hand, these surveys aren’t as reliable as they used to be,” said Will Compernolle, macro strategist at FHN Financial in New York.
Compernolle noted that the data “comes on the back of slower personal spending that we saw last Friday and a host of other things that people are looking to for weaker economic activity.”
Traders see a 59% chance that the Fed will begin cutting rates in September, up from about 53% before the ISM data was released, according to the CME’s FedWatch tool.
Money markets Monday priced in 84% odds the Bank of Canada will cut interest rates this Wednesday.
Among Toronto stock moves, GFL Environmental Inc was a standout. Its shares climbed 10.42% to the highest closing level since April 10.
On Wall Street, a glitch at the New York Stock Exchange had triggered massive swings in the shares of Berkshire Hathaway and Barrick Gold. Trading in at least 60 NYSE-listed stocks were halted due to the volatility, before the bourse fixed the technical issue and activity resumed.
Benchmark S&P 500 and the Nasdaq finished higher after paring earlier losses on the session, while the Dow lost ground. Technology stocks were the biggest gainers, while energy equities were the biggest drag.
The Dow Jones Industrial Average fell 115.29 points, or 0.30%, to 38,571.03, the S&P 500 gained 5.89 points, or 0.11%, to 5,283.40 and the Nasdaq Composite gained 93.66 points, or 0.56%, to 16,828.67.
Nvidia rose 4.9% after CEO Jensen Huang revealed that the company’s next-generation AI chip platform would be rolled out in 2026.
Shares of other megacaps, including Apple, Amazon , Alphabet, and Meta closed higher. Microsoft and Tesla finished lower.
GameStop soared 21% after a weekend Reddit post from stocks influencer Keith Gill, also known as “Roaring Kitty,” showed a $116 million bet on the gaming retailer.
Investors will be eyeing a data-packed week that includes U.S. surveys on the services sector, factory orders and Friday’s closely watched nonfarm payrolls report, which could provide clues to the Fed’s likely course of action with regards to rates.
Advancing issues outnumbered decliners by a 1.03-to-1 ratio on the NYSE. On the Nasdaq, 2,146 stocks rose and 2,171 fell as declining issues outnumbered advancers by a 1.01-to-1 ratio. The S&P 500 posted 25 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 68 new highs and 101 new lows. Total volume of shares traded across U.S. exchanges was about 11.5 billion shares, compared with the 12.6 billion average over the last 20 trading days.
Reuters, Globe staff
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