Canada’s main index inched lower on Tuesday, weighed by declines for the financial and utilities sectors, but the move was modest as commodity prices rose and ahead of an expected outsized interest rate cut by the Bank of Canada.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 6.63 points, or 0.03%, at 24,716.70, its second straight lower closing level after notching a record high on Friday.
U.S. benchmark the S&P 500 was also down marginally as investors awaited more earnings to assess the health of American companies.
“The big news in Canada this week is tomorrow with the Bank of Canada. So today, we’re most likely following the U.S. markets,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The BoC is expected to slash its benchmark rate by 50 basis points, its first such reduction in 15 years outside of the pandemic era.
The heavily weighted financials sector slipped 0.2%, pressured by a decline of 9.4% for the shares of goeasy Ltd after brokerage BMO downgraded the consumer lender to “market perform” from “outperform”.
The utilities sector was down 0.6% and consumer discretionary lost 0.7%.
The materials sector, which includes metal miners, was among the sectors that gained ground. It added 1.6% as gold climbed to an all-time high.
The price of oil also rose, settling 2.2% higher at $72.09 a barrel. Energy was up 0.1%.
Shares of Dye & Durham Ltd climbed 9.5% after the legal software firm confirmed a report that it has expanded scope of its strategic review process to include a sale or merger.
U.S. stock indexes barely budged after a quiet day of mixed trading on Tuesday.
The S&P 500 edged down by less than 0.1%. It was a tiny loss, but it still marked the first back-to-back drop for the index in a month and a half. The index fell modestly on Monday after coming off a sixth straight winning week, its longest such streak of the year.
The Dow Jones Industrial Average slipped 6 points, or less than 0.1%. Like the S&P 500, it’s been on a long, record-breaking rally and set its all-time high on Friday. The Nasdaq composite rose 0.2%.
General Motors jumped 10.4% for its best day since 2020 after delivering stronger profit and revenue for the latest quarter than analysts expected. It benefited from stronger sales to individual U.S. customers, even as sales slowed to large fleet buyers.
Philip Morris International was another one of the strongest forces pushing upward on the S&P 500 and rallied 10.5% after topping forecasts for both profit and revenue. CEO Jacek Olczak said the company is seeing momentum across regions and business lines, including growth for both its smoke-free business and for its combustible cigarettes.
Norfolk Southern climbed 4.9% after the railroad topped analysts’ forecasts for profit.
Trump Media & Technology Group jumped another 9.9% to bring its gain to 183% since hitting a bottom late last month. The company behind former President Donald Trump’s Truth Social platform is still losing money, but it tends to move more with the perceived chances of Trump’s reelection than anything else. It’s back above $34, but it’s still well below its peak above $66 reached in March.
Keeping indexes in check was GE Aerospace, which tumbled 9% and was the heaviest weight on the S&P 500. The company, which began trading independently this spring after splitting off from the former conglomerate General Electric, reported stronger profit for the latest quarter than analysts expected, but its revenue fell short of forecasts.
Verizon Communications sank 5% after likewise reporting weaker revenue for the latest quarter than expected, even though its profit edged past forecasts.
Genuine Parts, which sells automotive and industrial replacement parts, dropped 21% for the largest loss in the S&P 500 after its profit for the latest quarter fell well short of expectations. CEO Will Stengel said much of the shortfall was due to continued weakness in Europe and its industrial business.
Sherwin-Williams sank 5.3% after both its profit and revenue came in weaker than analysts expected. CEO Heidi Petz cited a “tough macroeconomic environment” and “continued choppiness in the demand environment” for its paints and coatings. Demand from do-it-yourself customers in North America remains weak given the higher debt levels that they’re carrying and still-lingering inflation.
All told, the S&P 500 slipped 2.78 points to 5,851.20. The Dow dipped 6.71 to 42,924.89, and the Nasdaq composite rose 33.12 to 18,573.13.
Stocks have slowed their record-breaking momentum this week under increasing pressure from rising Treasury yields in the bond market.
The yield on the 10-year Treasury held steady at 4.20%, where it was late Monday. That’s well above the 4.08% level it was at just on Friday. Higher yields for Treasurys can make investors less willing to pay high prices for stocks, which critics say already look too expensive.
Treasury yields have been climbing following a raft of reports showing the U.S. economy remains stronger than expected. That’s good news for Wall Street, because it bolsters hopes that the economy can escape from the worst inflation in generations without the painful recession that many had worried was inevitable.
“What appears to be unfolding before our eyes is a soft-landing scenario only the most optimistic dream of,” according to Gregory Daco, EY chief economist.
But it also is forcing traders on Wall Street to ratchet back expectations for how much the Federal Reserve will cut interest rates. The central bank has made the drastic shift to lowering interest rates in hopes of keeping the economy strong, but a more resilient-than-expected economy wouldn’t need as much help.
Traders are now largely expecting the Fed to cut its main interest rate by half a percentage point more through the end of the year, according to data from CME Group. A month ago, some of those same traders were betting on the federal funds rate ending the year as much as half a percentage point lower than that.
In stock markets abroad, European indexes were modestly lower despite German software giant SAP nudging past profit expectations. In Asia, Japan’s Nikkei 225 dropped 1.4%, and South Korea’s Kospi fell 1.3%, but indexes were more resilient in China.
Reuters and The Associated Press