Canada’s main stock index extended its pullback from a record high on Wednesday, as profit-taking in most sectors of the market offset gains for financials after stronger-than-expected earnings for two of Canada’s major banks.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 132.98 points, or 0.6%, at 23,126.98, its second straight day of declines after notching an all-time high on Monday.
Wall Street also lost ground, ahead of Nvidia’s quarterly report after the closing bell.
“We had a great run so today’s market declines on the TSX, but also south of the border, can largely be attributed to profit taking,” said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth.
The technology sector lost 1.6%, with shares of software firm Kinaxis tumbling 14.5% after the company said its CEO will retire from his role.
The materials group was down 2.1% as gold and copper prices fell.
The price of oil also dropped, settling 1.3% lower at US$74.52 a barrel, which weighed on energy.
“Investors have become more discerning in terms of how they reward or punish companies depending on whether they beat or miss earnings expectations,” Picardo said.
Royal Bank of Canada shares rose 2.2% to notch a record high after the bank surpassed quarterly profit estimates. Smaller peer National Bank of Canada also reported better-than-expected quarterly earnings. Its shares jumped 5.9%.
In contrast, Bank of Montreal reported lower-than-expected profit on Tuesday and Toronto-Dominion Bank last week reported its first loss in over two decades.
Shares of Nvidia, the dominant seller of AI processors, reported results after the closing bell. In regular trading it dipped 2.1%, trimming their gain so far this year to 154%. The stock was under further pressure in post market trading.
Following several blowout quarterly reports, Nvidia is viewed as the biggest winner so far from AI technology. Its latest results follow concerns about increases in already-hefty spending by Microsoft, Alphabet and other major players in the race to dominate emerging AI technology.
“It’s been the poster child for the AI boom and it’s really led the charge, so it would be hard for the market to move on in spite of a disappointment from Nvidia,” warned Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta.
“Nobody has their arms around how long Nvidia can continue to surprise on the upside, but, naturally, it can’t last forever,” Buchanan added.
The S&P 500 declined 0.60% to end the session at 5,592.18 points.
The Nasdaq declined 1.12% to 17,556.03 points, while the Dow Jones Industrial Average declined 0.39% to 41,091.42 points.
Of the 11 S&P 500 sector indexes, eight declined, led lower by information technology, down 1.3%, followed by a 1.05% loss in consumer discretionary.
Investors widely expect the U.S. Federal Reserve will lower interest rates at its September meeting after Fed Chair Jerome Powell’s support for imminent policy adjustment last week sparked broad-based market gains.
The CME Group’s FedWatch Tool currently sees a 64% chance of a 25-basis point reduction and a 37% chance of a 50-bps cut.
The Personal Consumption Expenditure report for July, due on Friday, may provide further insight into the central bank’s likely rate-cut trajectory.
Super Micro Computer tumbled 19% after the AI server maker said it would delay the filing of its annual report for the fiscal year ended June 30, a day after Hindenburg Research disclosed a short position in the company.
The market value of billionaire Warren Buffett’s Berkshire Hathaway surpassed $1 trillion for the first time. Its class B stock rose about 0.9%.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.3-to-one ratio.
Reuters, Globe staff