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The Toronto stock market snapped a four-session winning streak Monday despite record high oil prices and investors took in some bad news from the energy trust sector.
New York markets also gave back gains from last week’s strong performance on lighter-than-usual volume with investors content to sit on their hands a day before the U.S. Federal Reserve makes its much-anticipated announcement on interest rates.
Toronto’s S&P/TSX composite index stepped back 36.55 points to 13,809.86. The benchmark index rose almost 1.5 per cent last week.
The TSX Venture Exchange was down 6.25 points to 2,749.28 while the Canadian dollar continued to advance because of strong economic data, higher commodity prices and a weaker greenback, rising 0.24 of a cent to 97.28 cents (U.S.), its highest close since mid-February, 1977.
On Wall Street, the Dow Jones industrials moved down 39.1 points to 13,403.42 on growing conviction that the Fed will cut interest rates by a quarter-point Tuesday. The Nasdaq composite index fell 20.52 points to 2,581.66 and the S&P 500 index declined 7.6 points to 1,476.65.
Investors are counting on the Fed to cut rates by at least a quarter point to bolster confidence and prevent an economic slowdown from getting worse.
Many expect the Fed to cut as much as a half point from the benchmark funds rate.
Global financial markets have been mauled since early August when growing foreclosures in the U.S. subprime mortgage market morphed into a full-blown crisis on credit markets, where lending standards have tightened considerably.
But some analysts say the Fed is making a wrong move by cutting rates period — saying it sends the wrong message and likely won’t help to unclog the credit markets.
“I actually think that if they do cut, then they’re telling you it’s terrible,” said Chyanne Fyckes, chief investment manager at Stone Asset Management, adding she has great trouble understanding why the markets have recouped so much of the losses incurred in August when the credit crisis started.
“I just think it’s a very scary time in the markets. And I’m very heavily into cash. I don’t understand why the market is just so strong. Everyone that you talk to is generally agreed that the market is going to go lower at some point. Then why isn’t it now?” Canadian Press
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