Canada’s main stock index pulled back from a record high on Thursday as Toronto-Dominion Bank reported its first loss in over two decades and a railroad stoppage threatened to disrupt the domestic economy.
The S&P/TSX composite index ended down 84.26 points, or 0.4%, at 23,037.47, after posting a record closing high on Wednesday.
U.S. stocks also fell as central bank officials from around the world gathered in Jackson Hole for the annual Economic Symposium, with investors laser focused on Fed Chair Jerome Powell’s address on Friday for clues on the timing and extent of the Fed’s policy easing cycle.
Canada’s economy could shrink by billions of dollars this year after the country’s two biggest freight rail operators locked out workers affiliated with the Teamsters union on Thursday, after both companies and the union failed to conclude labour deals.
Still, shares of both companies, Canadian National Railway Co and Canadian Pacific Kansas City Ltd, ended higher.
“Given that rails are crucial for so many businesses, it’s difficult to see this being a prolonged lockout,” said Ben Jang, a portfolio manager at Nicola Wealth. “The government may step in sooner versus later.”
TD Bank shares fell 2.1% as the bank reported a quarterly loss after setting aside an extra US$2.6 billion to cover expected fines from U.S. regulators, which have been probing weaknesses in Canada’s second-largest lender’s anti-money laundering controls.
It’s still to be seen how much scrutiny the bank could face as it tries to expand in the U.S. and how that “would impact future growth prospects,” Jang said.
The technology sector lost 1.5%, falling alongside declines for U.S. tech stocks. The materials group was down 1.6% as gold prices fell, giving back some recent record-setting gains.
U.S. Treasury yields recovered from two-week lows hit the previous session, as investors took a breather buying government debt ahead of Powell’s speech. In afternoon trading, both U.S. and Canadian 10-year bond yields were up about 8 basis points.
Analysts said the downward trend in rates remained intact despite Thursday’s upward move.
U.S. data Thursday led by jobless claims and the S&P Global’s business activity index continued to show a slowing economy that backs expectations the Fed will start cutting interest rates next month. The data, including other recent economic reports, however, do not suggest a recession is on the horizon.
Thursday’s Fed speakers also alluded to a rate cut in September.
The Dow Jones Industrial Average fell 177.71 points, or 0.43%, to 40,712.78. The S&P 500 lost 50.21 points, or 0.89%, at 5,570.64 and the Nasdaq Composite dropped 299.63 points, or 1.67%, to 17,619.35.
The CBOE Volatility index, often viewed as a barometer of investor anxiety, breached 18, the highest intraday reading in a week, before settling at 17.56.
Among the 11 major sectors of the S&P 500, technology suffered the largest percentage loss, falling 2.1%. Real estate stocks led the gainers.
Among individual stocks, Snowflake raised its forecast for full-year product revenue. Even so, the data cloud analytics firm’s shares slid 14.7% as its margin forecast remained unchanged.
Zoom Video Communications jumped 13.0% after raising its annual revenue forecast.
Advance Auto Parts tumbled 17.5% after trimming its annual profit forecast.
Declining issues outnumbered advancing ones on the NYSE by a 2.16-to-1 ratio; on Nasdaq, a 2.25-to-1 ratio favored decliners. The S&P 500 posted 58 new 52-week highs and one new low; the Nasdaq Composite recorded 83 new highs and 68 new lows. Volume on U.S. exchanges was 9.79 billion shares, compared with the 11.89 billion average for the full session over the last 20 trading days.
Reuters, Globe staff