Canada’s main stock index edged lower for a second straight day on Tuesday as a drop in oil prices and fading optimism around China’s efforts to boost its economy weighed on energy and metal mining shares. Wall Street’s major indexes, however, ended higher, as investors bought back into technology stocks.
The S&P/TSX composite index ended down 30.2 points, or 0.1%, at 24,072.51, extending its pullback from a record closing high on Friday.
China, one of the world’s major consumers of oil and base metals, expressed confidence on achieving its full-year growth target. But it refrained from introducing stronger fiscal steps, disappointing investors who had banked on more support from policymakers to get the economy back on track.
“Today we saw a selloff in everything that was banking on a better Chinese economy,” says Colin Cieszynski, chief market strategist at SIA Wealth Management.
The TSX energy sector was down 2.3% as the price of oil settled 4.6% lower at US$73.57 a barrel amid easing fears of supply disruptions from the conflict between Israel and Iran.
The materials sector, lost 1% as gold and copper prices fell. Technology helped limit the market’s decline, rising 1.1%, while industrials ended up 0.6%.
Among the stocks posting the biggest declines was infrastructure technologies company Mattr Corp. Its shares dropped 10.5%. In contrast, South Bow Corp, TC Energy’s recent liquids pipeline spin-off, climbed 6.3%.
In U.S. markets, the S&P 500 rose 55.19 points, or 0.97%, to 5,751.13 points, while the Nasdaq Composite climbed 259.01 points, or 1.45%, to 18,182.92. The Dow Jones Industrial Average gained 126.13 points, or 0.30%, to 42,080.37.
U.S.-listed shares of Chinese companies slid, tracking losses in the country’s domestic stocks. Shares of Alibaba Group, JD.com and PDD Holdings slumped between 5.4% and 7.5%.
All three of the main indexes suffered a sell-off on Monday, falling roughly 1% each, as they were pressured by surging Treasury yields, escalating Middle East tensions, and a re-evaluation of U.S. rate expectations.
The easing of U.S. Treasury yields somewhat on Tuesday, however, meant investors were drawn to high-growth stocks, which benefit from lower debt costs to fuel their growth, such as technology companies.
The information technology index led gainers among the S&P 500 sectors, jumping 2.1%. It was aided by advances of 6.6% and 5.1%, respectively, by Palantir Technologies and Palo Alto Networks.
Heavyweight tech names were also buoyant, helping to push both the Nasdaq and the S&P 500 back above levels they finished at last week - albeit fractionally, in the case of the latter.
Nvidia was the pick of the so-called Magnificent Seven tech stocks, climbing 4.1% for its largest one-day percentage increase in a month. There were also gains for Apple, Tesla and Meta Platforms, which all rose between 1.4% and 1.8%.
While the abatement of rising Treasury yields helped tech stocks, it is still interest rate policy that is guiding traders and the U.S. equity markets.
Investors have been locked in all year on the U.S. Federal Reserve and how it plans to deliver its long-expected bout of interest rate cuts, with each new economic data set studied for how it could influence the thinking of the central bank.
Last week’s data releases, including Friday’s stronger-than-expected jobs report, had prompted investors to trim their rate cut bets slightly, albeit leaning more toward a 25 basis-point cut at the next Fed meeting in November, as opposed to 50 bps.
Traders have now priced in a nearly 89% chance of a 25 basis-point interest rate cut in November, according to CME FedWatch.
Markets now await U.S. consumer price index data, due this Thursday, for the next signpost on the path of interest rates.
“I do think (Friday’s) labor market report, and the CPI report combined, are the two primary items for the Federal Reserve heading in to their next meeting,” said Jason Pride, chief of investment strategy and research at Glenmede.
He added that if the CPI lands anywhere in the ballpark of what is expected, that would portend a 25 bps November cut.
Third-quarter earnings are also coming in to focus, with major banks scheduled to report this Friday. The estimated earnings growth rate for the S&P 500 is 5%, according to LSEG estimates.
Among U.S. stock moves, PepsiCo gained 1.9% after the snack maker trimmed its forecast for annual sales growth, but reported adjusted earnings per share above estimates.
Volume on U.S. exchanges was 11.57 billion shares, compared with the 12.1 billion average for the full session over the last 20 trading days.
Reuters, Globe staff