The Nasdaq Composite Index closed above the 16,000 mark for the first time on Friday, in its second-straight record finish, while the Dow succumbed to its fourth losing session in the last five.
Canada’s main stock index fell to a one-week closing low, as energy stocks declined on concerns that fresh lockdown risks in Europe due to a spike in coronavirus cases could slow oil demand.
The floods that caused widespread devastation in Canada’s western province of British Columbia and cut off access to key infrastructure could further fuel inflation and weighed on sentiment, fund managers said.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 82.51 points, or 0.38%, at 21,555.03, its lowest close since Nov. 10.
The energy stocks sub-index fell 3.23%, with Cenovus Energy, down 4.7%, Vermilion Energy, losing 4.2%, and Enerplus Corp, declining 5.5%.
Brent futures for January fell $2.35, or 2.9%, to settle at $78.89 a barrel. U.S. West Texas Intermediate (WTI) crude for December fell $2.91, or 3.6%, to $76.10. Both oil benchmarks declined for the fourth consecutive week, for the first time since March 2020.
In addition to rising Covid-19 cases in Europe, investors also weighed a potential release of crude reserves by major economies to cool prices.
“The fear of the unknown is weighing on market sentiment,” said Phil Flynn, senior analyst at Price Futures in Chicago. “The worry is that we will get some sort of coordinated release during the Thanksgiving Holiday next week, when volumes are typically low and dramatic moves have occurred.”
Austria became the first country in western Europe to reimpose a full coronavirus lockdown this autumn to tackle a new wave of COVID-19 infections across the region.
Germany, Europe’s largest economy, warned it may also have to move to a full lockdown.
The TSX financial services sector fell 0.26% and materials, including precious and base metal miners and fertilizer companies, dropped 0.89%.
Of the four TSX main groups to make gains on Friday, utilities and technology stocks led the way, rising 0.6% and 0.52% respectively.
Irwin Michael, portfolio manager at ABC Funds, said floods and mudslides that destroyed roads, houses and bridges in British Columbia were hitting the market.
“It’s shutting down the mainland from the rest of the interior,” he said. “There’s concern that it could be inflationary as lumber prices probably go up because there’s greater demand, particularly in Western Canada.”
The index fall came despite better-than-expected retail data in September from Statistics Canada.
Both the Nasdaq and S&P 500 index scored a winning week, up 1.2% and 0.3% respectively, after last week’s declines snapped a five-week run of higher finishes.
The Dow Jones Industrial Average’s second-successive weekly loss - this one of 1.4% - wiped out the last of its November gains, extending the index’s drop from a Nov. 8 record high to 2.3%.
Friday’s fall was caused by banking, energy and airline stocks slumping on the fears that European countries, battling a resurgence of COVID-19 cases, could follow Austria in moving towards a full lockdown.
Banking stocks fell 1.6%, tracking a drop in Treasury yields as investors snapped up safe-haven bonds. The S&P energy index dropped 3.9%, the worst performing sector, as crude prices fell on demand implications.
Carriers including Delta Air Lines, United Airlines and American Airlines, and cruiseliners Norwegian Cruise Line and Carnival Corp all dropped between 0.6% and 2.8%.
“It’s a normal time to take risk off. And in this case, there’s just so much liquidity that the market doesn’t go down - just people take risk off by going into safe havens,” said Jay Hatfield, chief executive of Infrastructure Capital Management in New York.
Falling yields and safe-haven demand supported major technology stocks, which in turn lifted the Nasdaq.
FAANG stocks, which have largely persevered through economic shocks since 2020, traded broadly higher. Netflix Inc gained along with other stay-at-home stocks.
Chipmaker Nvidia Corp rose 4.1% to its third straight closing high, and the Philadelphia semiconductor index , up 0.3%, hit its third record closing high in four.
The Dow Jones Industrial Average fell 268.97 points, or 0.75%, to 35,601.98; the S&P 500 lost 6.58 points, or 0.14%, at 4,697.96; and the Nasdaq Composite added 63.73 points, or 0.4%, to 16,057.44.
The S&P 500 gyrated on Friday before slipping into negative territory, after a week in which retailers pushed it to a record finish the previous day.
The S&P consumer discretionary sector rose 0.3% to a closing peak for a second day in a row, after breaking its lifetime intraday high on Friday. This follows strong retail earnings this week and positive signs for holiday shopping.
Lowe’s Companies rose 0.9% to its third successive record close after reporting third-quarter results on Wednesday. Etsy Inc, which posted earnings earlier this month, achieved the same closing feat after finishing up 1.4%.
“Out of the Q3 earnings, one of the trends we have seen is the resounding strength of the U.S. consumer,” said Jessica Bemer, portfolio manager at Easterly Investment Partners.
“We’ve heard it all through this week from retailers talking about the consumer coming back into the store, enjoying the shopping experience and getting ready for the holidays. It makes sense but it was really validated during earnings season.”
Profit-taking in names which gained earlier in the week led to drops of between 2.9% and 8.8% in Macy’s Inc, Kohls Corp and Gap Inc.
The information technology segment, up 0.8%, was the best performer on the S&P 500.
It was buoyed by Intuit Inc, which jumped 10.1% as brokerages lifted their price targets on the income tax software company after it beat quarterly estimates and raised forecasts.
Volume on U.S. exchanges was 10.68 billion shares, compared with the 11.12 billion average for the full session over the last 20 trading days. The S&P 500 posted 45 new 52-week highs and nine new lows; the Nasdaq Composite recorded 100 new highs and 309 new lows.
Reuters, Globe staff
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