Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, May 13.Michael Nagle/Bloomberg
Canadian stocks fell on Friday clawing back a weekly gain, as financial shares and energy producers declined with the price of crude, after U.S. retail data jumped the most in a year and spurred bets on higher interest rates.
The benchmark S&P/TSX Composite Index lost 0.28 per cent, or 39.22 points, to 13,748.58 in Toronto, trimming a weekly gain to 0.3 per cent. Volume in the benchmark was 6.5 per cent lower than the 30-day average. The gauge now trades at 20.8 times earnings, about 9.4 per cent higher than the 19 times valuation of the S&P 500, data compiled by Bloomberg show.
U.S. consumer purchases jumped 1.3 per cent in April, the most since March 2015, providing the Federal Reserve more confidence higher interest rates won't disrupt growth. The U.S. is Canada's largest trading partner.
Crude futures dropped over 1 per cent in New York. Investors weighed the return of output from Canadian oil-sands producers after the Alberta wildfires against supply reductions from the U.S. to Nigeria. Militant attacks have cut output in Nigeria to the lowest in 20 years.
Investors also weighed disappointing earnings results. Financial services stocks slipped 0.6 per cent, led by a 0.9-per-cent decrease in Manulife Financial Corp. Onex Corp., Canada's largest buyout firm, tumbled 4.8 per cent, the most in more than two months, after reporting a wider first-quarter loss than analysts had forecast.
Hudson's Bay Co. sank 7 per cent to a three-year low after reporting same-store sales results for its first quarter, ahead of full financial results on June 9. Eliminating foreign exchange swings, same-store sales decreased 1 per cent, including a 5.7-per-cent drop at its Saks Fifth Avenue unit.
Meanwhile Kinross Gold Corp. and Eldorado Gold Corp. maintained gains as raw-materials producers advanced.
Concordia Healthcare Corp. surged 14.7 per cent, after the drugmaker confirmed it is working with Greenhill & Co. considering strategic options for the company. Concordia earlier reported first-quarter earnings short of estimates. The stock has slumped 41 percent this year, among the worst-performing in the S&P/TSX this year.
Canadian Tire Corp. lost 2.9 per cent after analysts at Credit Suisse Group AG lowered their rating for the stock to the equivalent of a sell, as the stock has become expensive. The retailer has jumped 22 per cent this year, trading at a record Thursday after posting first-quarter earnings ahead of expectations.
U.S. stocks fell, with the S&P 500 marking the longest weekly losing streak in four months, amid lacklustre results from large retailers while data signaling consumers remain healthy added to the case for higher interest rates.
Despite signs of vitality among consumers, companies that rely on their willingness to spend were among the biggest losers Friday as Nordstrom Inc. and J.C. Penney Co. added to a list of disappointing results and outlooks from department stores this week. Losses among banks accelerated in afternoon trading while energy producers retreated as crude prices fell for the first time in four days.
The S&P 500 dropped 0.9 per cent to 2,046.53 in New York, capping a third straight weekly loss and closing at a one-month low. Declines gathered pace after the gauge slipped below its average price during the past 50 days.
The Dow Jones industrial average was down 185.38 points, or 1.05 per cent, to 17,535.12, while he Nasdaq Composite dropped 19.66 points, or 0.41 per cent, to 4,717.68
"You'd think the retail numbers would prevent the market from going lower like in the last couple weeks," Mark Kepner, an equity strategist at Chatham, New Jersey-based Themis Trading LLC, said by phone. "But there are some other issues with the market right now. Every time we get up to 2,100 there's resistance, and overall the earnings aren't great and that's a factor as well."
A report Friday showed sales at retailers in April saw the biggest gain since March 2015, contrasting with weak quarterly results this week from major chains including Macy's Inc. and Kohl's Corp. Nordstrom tumbled 13 per cent, the most in the S&P 500 Friday, after cutting its annual forecast. Wal-Mart Stores Inc. lost 2.9 per cent to lead declines in the Dow. Amazon.com Inc. slipped 1.1 per cent to fall for the first time in six days.
A rally that sent the S&P 500 up as much as 15 per cent has been struggling to regain momentum since reaching a four-month high on April 20, amid mixed earnings and lukewarm signs of an economic pickup. This week was marked by the benchmark surging the most in two months on Tuesday as commodities rebounded, only to slide by the most in a month Wednesday after disappointing results from Walt Disney Co. and Macy's spurred a broader sell-off.
Oil pared a weekly advance as investors weighed the return of output from Canadian producers against global supply reductions from Nigeria to the U.S.
Futures dropped 1.1 per cent in New York, trimming the week's gains to 3.5 per cent. Companies including Enbridge Inc. are resuming operations in Alberta after wildfires curbed operations. Militant attacks have cut output in Nigeria to the lowest in 20 years. Exxon Mobil Corp. invoked a legal clause allowing it to suspend shipments of Qua Iboe crude from Nigeria without breaching contracts.
"There is no question the main driver is mounting outages in Nigeria," Michael Wittner, head of oil-market research at Societe Generale SA, said. "That's high-quality, light, sweet crude. The other big story of the week, which partly offsets Nigeria, is that the situation in Alberta seems to be getting better. The market is definitely weighing the two against each other."
Producers in Canada are resuming output at some sites after wildfires took production offline. Enbridge is readying its oil-sands pipelines for startup after the blaze in Alberta, according to Chief Executive Officer Al Monaco, and Royal Dutch Shell Plc resumed output at its Albian site at reduced rates. There are no oil-sands facilities currently at risk from the wildfires, Chad Morrison, a wildfire manager for the Alberta government, told reporters Thursday.
West Texas Intermediate for June delivery declined 49 cents to settle at $46.21 a barrel on the New York Mercantile Exchange. Prices posted a gain this week after last week's decline. Brent for July settlement fell 25 cents, or 0.5 per cent, to end the session at $47.83 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a 93-cent premium to July WTI.
Oil has rebounded after slumping to the lowest level since 2003 earlier this year as U.S. output declines. The global surplus in the first half of this year is smaller than previously estimated because of robust demand in India and other emerging nations, the International Energy Agency said. Still, further gains in oil prices "are likely to be limited by brimming crude and products stocks," it predicted.
The number of active oil rigs fell to 318 this week, according to Baker Hughes Inc. U.S. crude production dropped to the lowest level since September 2014 last week, according to an Energy Information Administration report released on Wednesday. Nationwide stockpiles declined in the week ended May 6 for the first time in more than a month, yet inventory still remains near the highest level since 1929, the report showed.
"There are a lot of opposing tensions in the market," Wittner said. "The market is weighing an outlook for the nearly balanced second half of the year versus the current situation. Despite these outages that we've had, we're still swimming in crude oil and products, too."