Stocks fell on Tuesday, with commodities dragging on major indexes amid a budget impasse in Washington and downbeat views from central bankers in Australia and Canada.
The S&P 500 closed at 1407.05, down 2.41 points or 0.2 per cent. The blue-chip Dow Jones industrial average closed at 12,951.78, down 13.82 points or 0.1 per cent. In Canada, the S&P/TSX composite index closed at 12,137.18, down 32.56 points or 0.3 per cent.
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 – arguing that any agreement on a budget must come with higher income-tax rates for top-earning Americans. The lack of an agreement pushes the U.S. economy closer to the “fiscal cliff” 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, matching its lowest level seen during 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 biggest casualties in Tuesday’s action. Gold fell to $1,695.80 an ounce, down about $25.30, hitting its lowest level in four weeks. Crude oil fell to $88.50 an ounce, down 59 cents.
Among Canadian commodity producers, Suncor Energy Inc. fell 0.2 per cent but Barrick Gold Corp. rose 1 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.
In the U.S., Netflix Inc. jumped 14 per cent after the movie-streaming company announced a deal to offer subscribers animated features from Walt Disney Co.
In the post market Tuesday, Pandora Media Inc. shares plunged about 20 per cent after it released earnings and issued revenue guidance below Street expectations.