Canada’s main stock index ended lower on Tuesday, pulling back from a record high, as a drop in oil prices weighed on the energy sector and investors weighed prospects for bank earnings after mixed results from some of the country’s major lenders. Major Wall Street indexes, however, finished modestly higher, with the Dow Jones Industrial Average notching a record-high close.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 89.01 points, or 0.4%, at 23,259.96, after posting a record closing high on Monday.
Bank of Montreal shares fell 6.5% after the lender reported lower-than-expected profit, warning it would need to continue to set aside money for loans that are unlikely to be repaid.
Shares of Bank of Nova Scotia fared better, rising 2.5%, after the bank beat analysts’ profit estimates.
“There’s more likely downside pressure for bank earnings moving forward with a slowing Canadian economy as consumers seem to be tapped out at this moment,” said Macan Nia, co-chief investment strategist at Manulife Investment Management.
Canadian gross domestic data, due on Friday, is expected to show the economy growing in the second quarter at an annualized rate of 1.6%, which is below the roughly 2.4% rate that Canada’s central bank estimates for potential growth.
The TSX energy sector was down 2% as the price of oil settled 2.4% lower at US$75.53 a barrel on worries that slower economic growth in the U.S. and China could reduce demand for energy.
The materials group also ended lower, falling 0.7%.
Real estate was a standout. The sector, which could particularly benefit from recent declines in borrowing costs, rose 1% to trade at its highest level since February 2023.
In the U.S., heavyweight tech-related stocks were mixed, with the focus on upcoming results from Nvidia, the chipmaker at the center of Wall Street’s rally in AI-related stocks.
Nvidia’s shares climbed 1.5% and it was the most-traded company on U.S. stock exchanges, according to LSEG data.
Up 159% in 2024, Nvidia is viewed as the biggest winner so far from AI technology, and its results follow recent concerns about increases in already-hefty spending by Microsoft, Alphabet and other major players in their race to dominate emerging AI technology.
“There’s a really, really high bar to clear for not just Nvidia’s earnings and guidance, but the story they tell about the state of AI that kind of lifts the tech sector out of its recent funk,” said Ross Mayfield, investment strategy analyst at Baird.
Apple shares closed 0.4% higher, while Amazon dipped 1.4%.
The S&P 500 climbed 0.16% to end the session at 5,625.80 points. The Nasdaq gained 0.16% to 17,754.82 points, while the Dow rose 0.02% to 41,250.50 points, closing for the second day in a row at a record high.
Of the 11 S&P 500 sector indexes, six rose, led by information technology, up 0.63%, followed by a 0.48% gain in financials.
Data on Tuesday showed U.S. consumer confidence rose to a six-month high in August, while consumers also became more anxious about the labour market after the unemployment rate jumped to near a three-year high of 4.3% last month.
Investors will look to July Personal Consumption Expenditure data due on Friday for additional hints at the potential pace of rate cuts.
Traders are now betting on an interest rate cut of either 25 or 50 basis points in September, according to CME Group’s Fed Watch tool.
Meanwhile, UBS Global Wealth Management raised the odds of a U.S. recession to 25% from 20%, citing weakness in the labor market.
Paramount Global slid more than 7% after Edgar Bronfman Jr. abandoned his bid for the company, clearing the way for Skydance Media to take control of Shari Redstone’s media empire.
Super Micro Computer declined 2.6% after short seller Hindenburg Research said it had a short position in the AI server maker.
The PHLX Housing index lost 1.2% after data showed single-family home prices fell in June as higher mortgage rates weighed on demand.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.1-to-one ratio. The S&P 500 posted 50 new highs and 1 new low; the Nasdaq recorded 62 new highs and 57 new lows. Volume on U.S. exchanges was relatively light, with 8.6 billion shares traded, compared to an average of 11.9 billion shares over the previous 20 sessions.
Reuters, Globe staff