Â鶹´«Ã½AV

Skip to content

S&P/TSX composite down more than 200 points, U.S. stock markets also lower

The path of least resistance for the market is down.
2023052411058-646e2939a96069b2319c2753jpeg
The S&P TSX composite index screen at the TMX Market Centre in downtown Toronto is photographed on Friday, Nov.11, 2022. THE CANADIAN PRESS/ Tijana Martin

TORONTO — Canada's main stock index was down more than 200 points Wednesday, with financials, metals and industrials leading the decline, while U.S. stock markets also retreated as debates over the country's debt ceiling remained unresolved.

Officials debating a debt-ceiling deal to avert a financial crisis are “still far apart,” House Speaker Kevin McCarthy said, though he expressed optimism that the two sides can reach an agreement before the government runs out of cash to pay its bills. 

“The tone is negative,” said Allan Small, senior investment adviser at iA Private Wealth.

While much of the blame for the market’s downward trend has been placed on the ongoing debt ceiling talks, there are other factors weighing on stocks, said Small, including uncertainty about whether the Federal Reserve will pause its interest rate hikes next month. 

Meeting minutes from the central bank showed officials were divided earlier this month on whether to pause interest rate hikes at the upcoming meeting in June. 

Right now, the path of least resistance for the market is down, said Small.

“Not a huge down day, but enough to get our attention,” he said. 

The S&P/TSX composite index was down 218.32 points at 19,927.69.

In New York, the Dow Jones industrial average was down 255.59 points at 32,799.92.The S&P 500 index was down 30.34 points at 4,115.24, while the Nasdaq composite was down 76.08 points at 12,484.16.

In Canada, all eyes were on earnings reports from the big banks, with Bank of Montreal and Scotiabank showing the weight of weakening economic conditions in their results Wednesday.

Both banks reported higher expenses and more money set aside for bad loans, as well as slowing loan growth, leading to a decline in earnings. 

The fact that bank earnings are slowing isn’t a surprise given the economic conditions, said Small, though the reports so far have fallen short of analysts’ expectations. 

He doesn’t expect the trend to reverse any time soon.

“We could see a few quarters of numbers in decline.” 

In one “bright spot,” tech continues to outperform the markets' year to date, said Small, as the sector recoups some of its 2022 losses. He thinks some optimism from investors over artificial intelligence is also helping boost tech stocks. 

“It's the NASDAQ and the tech names that are leading the charge,” said Small. 

But markets overall appear to be in a lull, he said, as uncertainty about interest rates weighs heavy on investors.

Once markets have a better idea of what’s ahead, Small thinks equities will pull out of their current range and make gains. 

“I think we’re going to stay range bound … until the Fed stops raising rates, which hopefully will be next month,” he said. 

The Canadian dollar traded for 73.63 cents UScompared with 74.05 cents US on Tuesday.

The July crude contract was up US$1.43 at US$74.34 per barrel and the July natural gas contract was up eight cents at US$2.57 per mmBTU.

The June gold contract was down US$9.90 at US$1,964.60 an ounce and the July copper contract was down nine cents at US$3.56 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published May 24, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

Rosa Saba, The Canadian Press

push icon
Be the first to read breaking stories. Enable push notifications on your device. Disable anytime.
No thanks