Canada’s benchmark stock index closed lower Thursday, pressured by sizeable declines in the materials and energy sectors amid a pullback in commodity prices. The S&P 500 closed nominally higher, retracing early gains just before the closing bell on the penultimate trading day of 2023.
The S&P 500 concluded the light volume session just 0.3% shy of its record closing high, reached on Jan. 3, 2022. The blue-chip Dow ended modestly green while the Nasdaq closed a hair lower. All three indexes remained on track for monthly, quarterly, and annual gains.
“This is one of the best end-of-year rallies we’ve ever seen and a lot of this rally happened before the Fed pivot in the middle of December,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
“It’s a nice reminder of how far we’ve come from the depths of the bear market last year and reminder to investors that dark clouds happen, but the sun always comes out again,” Detrick added.
Had the S&P 500 settled above its previous all-time closing high, it would have confirmed that the benchmark index entered a bull market when it reached the bear market closing trough in October 2022.
“Reaching new highs after two years could be a subtle sign that economic strength could be in the cards for 2024,” Detrick said.
U.S. data released early in the day, including jobless claims, pending home sales and preliminary trade/inventories all painted a picture of a softening but resilient economy. This scenario has helped cement bets the U.S. Federal Reserve might cut its policy rate sooner than expected and could pull off a soft landing by avoiding recession.
Financial markets have priced in a 74.1% probability policymakers will cut the Fed funds target rate by 25 basis points in March, according to CME’s FedWatch tool.
The S&P/TSX Composite Index closed at 20,929.38, down 86.53 points or 0.41%. The materials sector lost 1.5%, as U.S. gold futures settled down 0.5% at US$2,083.50 and copper prices lost 1.1%.
The TSX energy sector lost 1.4%, with oil prices taking a stumble as more shipping companies said they were ready to transit the Red Sea route, easing concerns about supply disruptions as Middle Eastern tensions stay elevated.
U.S. West Texas Intermediate crude futures fell by $2.34, or 3.2%, to $71.77 a barrel. On Wednesday, oil prices dropped nearly 2% as major shipping firms began returning to the Red Sea.
“There’s a greater sensitivity to commodity prices in Canada versus the United States. The TSX is underweight in information technology, communication, health care and consumer discretionary,” said Brandon Michael, senior investment analyst at ABC Funds. “The global indices are continuing to lift higher... it’s not the same story for the TSX.”
Weighing on the energy index, Energy Fuels tumbled 7% to the bottom of TSX after the minerals company announced that the chief financial officer Tom Brock would step down.
Other gold stocks including Torex Gold, Seabridge Gold, New Gold were among top losers on the index.
The health-care sector added 2.7%, following a 8% jump in cannabis company Tilray Brand shares, extending gains from the previous session.
Shares of Shopify jumped 1% and were set to close the year with one of the highest gains on the exchange. The information technology ended higher and is on track to be the best-performing sector, up over 50% year-to-date.
The Dow Jones Industrial Average rose 53.58 points, or 0.14%, to 37,710.1, the S&P 500 gained 1.77 points, or 0.04%, to 4,783.35 and the Nasdaq Composite dropped 4.04 points, or 0.03%, to 15,095.14.
Among the 11 major sectors of the S&P 500, utilities had the largest percentage gain. Energy shares were down the most.
U.S.-listed shares of Chinese companies, including Alibaba Holdings, PDD Holdings and JD.Com Inc advanced between 0.6% and 2.7% as China’s blue-chip stocks staged their biggest jump in five months.
CytoSorbents slid 33.4% after the company’s device aimed at reducing bleeding during surgery failed meet the main goal of a study.
Boeing dipped 0.7% after the planemaker urged airlines to inspect newer 737 MAX airplanes for a possible loose bolt in the rudder control system.
Declining issues outnumbered advancing ones on the NYSE by a 1.00-to-1 ratio; on Nasdaq, a 1.08-to-1 ratio favored decliners.
The S&P 500 posted 49 new 52-week highs and no new lows; the Nasdaq Composite recorded 141 new highs and 37 new lows.
Volume on U.S. exchanges was 9.46 billion shares, compared with the 12.57 billion average for the full session over the last 20 trading days.
Reuters, Globe staff