The Toronto stock market was lower late morning Tuesday as testimony from U.S. Federal Reserve chairman Janet Yellen sparked another round of concern about rising interest rates.
The S&P/TSX composite index lost 70.23 points to 15,101, led by falling energy stocks as weak U.S. retail data helped push crude prices below $100 (U.S.) a barrel.
The Canadian dollar was off 0.38 of a cent to 92.95 cents (U.S.).
New York indexes were lacklustre after Yellen said in delivering the Fed’s semi-annual economic report to Congress that the economic recovery is not yet complete and the Fed intends to keep providing significant support. But she also said if labour market conditions continue to improve more quickly than anticipated, the Fed could raise its key short-term interest rate sooner than currently projected.
The Dow Jones industrial rose 6.9 points to 17,062.32, the Nasdaq fell 21.92 points to 4,418.5 while the S&P 500 index was off 3.34 points to 1,973.76.
The Fed’s semi-annual report to Congress also pointed out that some broad equity price indexes have increased to all-time highs in nominal terms since the end of 2013.
It observed that “valuation metrics in some sectors do appear substantially stretched, particularly those for smaller firms in the social media and biotechnology industries.”
Earlier, investors digested data that showed U.S. retail sales for June rose by 0.2 per cent, less than the 0.6 per cent gain that had been expected. Excluding autos, sales rose 0.4 per cent.
Traders also focused on another round of strong earnings from the U.S. financial sector as JPMorgan Chase and Goldman Sachs both beat analyst expectations in the most recent quarter.
JPMorgan Chase posted second-quarter profit of $5.99-billion (U.S.), or $1.46 a share, down from $6.5-billion, or $1.60 a share in the same period a year ago. Revenue slipped two per cent from a year ago to $25.35-billion. The results exceeded forecasts of $1.29 a share and revenue of $23.73-billion and its shares were up 4.05 per cent to $58.57.
And Goldman Sachs reported quarterly earnings per share of $4.10 versus $3.70 a year ago, handily beating expectations of $3.05 a share. Its shares gained 0.85 per cent to $168.44.
The energy component led TSX decliners, down two per cent as oil prices fell below $100 a barrel in the wake of the American retail numbers. August crude on the New York Mercantile Exchange dropped $1.80 to $99.11. Prices have fallen sharply over the last week as worries about supply disruptions from Iraq eased and on the prospect of more supplies from Libya. Weaker than expected economic data for the first half of the year prompted the International Energy Agency and other experts to trim their forecasts for short and medium term demand. Crude fell over three per cent last week.
However, Sid Mokhtari, market technician at CIBC World Markets, noted that the energy sector is a star performer so far this year on the TSX, up about 18 per cent year to date.
“The sector has run a huge course and by the time the S&P/TSX energy sector reached its highs, you were almost back at the highs of 2011, when the complex came under severe pressure,” he said.
The base metals group was down 1.46 per cent as September copper was unchanged at $3.25 a pound.
The gold sector was also a drag, down one per cent as August bullion erased early gains to move down $10.40 to $1,296.30 an ounce after falling $30 on Monday.