North American stocks struggled for direction on Tuesday in midday trading, with commodities dragging on major indexes amid a budget deadlock in Washington and downbeat views from central banks in Australia and Canada.
The S&P 500 was down 1 point or less than 0.1 per cent, to 1409. The blue-chip Dow Jones industrial average was up 15 points or 0.1 per cent, to 12,981. In Canada, the S&P/TSX composite index was down 44 points or 0.4 per cent, to 12,126.
The White House rejected the Republican budget proposal, released on Monday – which offered $800-billion (U.S.) in increased tax revenue without raising tax rates – which pushes the U.S. economy closer to the fiscal clif of automatic tax increases and spending cuts in the New Year.
Meanwhile, central banks sounded dour about the health of the global economy. Australia’s central bank cut its key rate by a quarter of a percentage point, to 3 per cent, or its lowest level since the depths of the financial crisis – and pointed to the end of the country’s mining boom. As well, the Bank of Canada held its key rate unchanged and said that the economy’s “underlying momentum” is softer than it had anticipated previously.
Commodities were among the top casualties in Tuesday’s action. Gold fell to $1,701 an ounce, down about $20. Crude oil fell to $88.19 an ounce, down 90 cents.
Within the S&P 500, consumer discretionary stocks fell 0.5 per cent, telecom stocks fell 0.4 per cent and financials fell 0.3 per cent. Health care stocks rose 0.4 per cent and industrials rose 0.2 per cent.
Within Canada’s benchmark index, commodity producers were the main laggards: Energy stocks fell 0.8 per cent and materials fell 0.6 per cent.
Bank of Montreal rose 0.8 per cent after it reported that its fiscal fourth-quarter earnings rose 41 per cent over last year. It earned $1.1-billion (Canadian) or $1.59 a share.