Canada’s main stock index fell on Tuesday as a drop in oil prices weighed on energy shares, but the move was limited as Wall Street closed higher ahead of a key inflation report.
The S&P/TSX composite index ended down 24.06 points, or 0.1%, at 23,003.09.
U.S. crude oil futures settled at the lowest level since December 2021, falling 4.3% to US$65.75 a barrel, as OPEC+ revised down its demand forecast for this year and 2025.
The energy sector was down 2.3%, its seventh straight day of declines, with Precision Drilling falling 4.7% and Canadian Natural Resources ending 3.5% lower.
The focus for many investors continued to be the U.S. inflation report for August, due on Wednesday, which could reinforce expectations the Federal Reserve would begin an interest rate cutting campaign later this month.
Wall Street’s benchmark S&P 500 index closed up 0.5% on Tuesday but concerns about slowing economic growth stunted gains and the Dow dipped as bank stocks sank after warnings of current-quarter weakness.
U.S. bank stocks fell broadly after Goldman Sachs CEO David Solomon said late on Monday that trading revenue could fall 10% this quarter. On Tuesday, JPMorgan Chase tempered expectations about income from interest payments.
Also, the finance chief of smaller consumer lender Ally Financial said credit challenges have intensified this quarter, sending its shares down 17.6%.
The warnings from banks overshadowed an announcement by the Federal Reserve’s regulatory chief of a plan to significantly ease an earlier proposal to raise big banks’ capital.
“A lot of the action today is being driven by concern the banks are lowering expectations for earnings for the current quarter,” said Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina. “The news from JPMorgan, Goldman Sachs and Ally stole the show because they’re saying that fundamentally their business is slowing down.”
Investors fretted over the economic implications of weaker energy demand on top of uncertainty about the Fed’s decision on interest rates next week and its comment on the economy. In addition, the U.S. presidential election looms on Nov. 5.
“We’re getting these signs that economic growth across the globe is slowing and it adds angst when we already have such uncertainty here with the election cycle,” Bell said, suggesting that September and October could be weak months for stocks.
Election uncertainty was in focus ahead of Tuesday’s televised debate between Democratic presidential candidate Kamala Harris and Republican candidate Donald Trump.
The Dow Jones Industrial Average fell 92.63 points, or 0.23%, to 40,736.96, the S&P 500 gained 24.47 points, or 0.45%, to 5,495.52 and the Nasdaq Composite gained 141.28 points, or 0.84%, to 17,025.88.
In the previous session, Wall Street’s main indexes had recorded gains of more than 1% as investors started the week seeking bargains after last week’s steep losses.
The S&P 500′s financial industry index was the benchmark’s second-weakest sector and its biggest index point drag on Tuesday with a 1% drop. Its biggest drags were JPMorgan Chase, down 5.2%,and Goldman Sachs, off 4.3%.
In other individual stocks, Hewlett Packard Enterprise , the S&P 500′s biggest decliner on Tuesday - fell 8.5% after the server maker announced a US$1.35 billion mandatory convertible preferred stock offering to fund its acquisition of Juniper Networks.
However, Oracle shares rallied 11.4%, making it the S&P 500′s biggest gainer, after the software company beat estimates for quarterly results.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE, which registered 390 new highs and 159 new lows.
In Toronto trading, technology added 0.8% and the materials group and metal mining shares, was up 1.4% as the price of gold rose.
Reuters, Globe staff