Wall Street’s optimistic start to the New Year continued on Tuesday as prices for some stocks, oil and the U.S. dollar advanced, but investors dialed back risk-taking elsewhere as data showed U.S. manufacturing slowed and COVID-19 spread. Canada’s main stock index edged higher as energy and financial stocks climbed, but the index gave back much of its earlier advance as the shares of technology heavyweight Shopify Inc fell by the most in more than a year.
The S&P 500 was flat Tuesday while the Dow Jones Industrial Average rose 0.59% to 36,799.65, a fresh record, as bank stocks surged with U.S. Treasury yields.
At the same time, the Nasdaq Composite reversed Monday’s strong gains to fall more than 1.33%, with declines in shares of high-flyers Tesla Inc, Microsoft Corp and Apple Inc.
“While seats are filling up again on Wall Street, we think that market players will be slow to increase risk,” Scott Ladner, chief investment officer at Charlotte-based wealth management firm Horizon Investments, wrote in an email.
The mixed picture was underscored by U.S. manufacturing activity: fresh data showed it had slowed in December amid cooling demand for goods, but supply constraints were starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade, according to The Institute for Supply Management.
The United States also set a global record of almost 1 million new coronavirus infections reported on Monday, according to a Reuters tally, nearly double the country’s peak of 505,109 hit just a week ago.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 13.68 points, or 0.06%, at 21,236.52, on its first day of trading in 2022.
The benchmark index gained 22% in 2021, its best yearly performance since 2009, supported by massive stimulus, vaccine rollouts and hopes of global economic recovery.
Domestic data on Tuesday showed that Canadian manufacturing activity expanded in December but the pace was the slowest in five months as material shortages and delivery delays held back output.
The energy sector climbed 3.7% as an agreement by OPEC+ to stick with its planned increase for February bolstered oil prices. U.S. crude oil futures settled 1.2% higher at $76.99 a barrel.
Financials rose 1.8%, while healthcare added 2.4% as the shares of cannabis producers rallied.
Among the sectors losing ground was technology. It ended down 3.3%. As was the case on Wall Street, rising bond yields put a dent into the appetite for growth stocks. Shopify, which has the largest market capitalization on the Toronto market, tumbled 10.9%, its biggest decline since November 2020.
Global equities were up earlier on Tuesday. The Euro STOXX 600 gained 0.82% to hit a record of 494.02 points. Asian stocks also gained, with MSCI’s gauge of Asia Pacific stocks outside Japan up around 0.4%.
The U.S. dollar rose against the Japanese yen to hit a five-year peak as investors anticipated the Omicron variant would not derail the global economy or delay the Federal Reserve’s expected rate hikes.
The dollar index rose 0.097%, with the euro down 0.11% to $1.1282.
U.S. Treasury yields rose as bond investors geared up for rate hikes from the Fed by mid-year to curb stubbornly high inflation.
Minneapolis Fed President Neel Kashkari on Tuesday said he expects the U.S. central bank will need to raise interest rates twice this year, reversing his long-held view that rates will need to stay at zero until at least 2024.
Benchmark 10-year yields advanced to a six-week high of 1.649%.
In a sign of investors hedging their bets, gold consolidated above the key $1,800 per ounce level on Tuesday, after a sharp retreat in the last session.
Spot gold added 0.8% to $1,814.43 an ounce. U.S. gold futures gained 0.83% to $1,814.00 an ounce.
The Associated Press, Reuters, Globe staff
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