Wall Street ended lower on Tuesday, pulled down by Apple and Tesla, while materials stocks climbed as investors waited for the U.S. Congress to approve another stimulus package. The TSX, however, closed higher, with that boost in the materials sector providing extra support to Canada’s benchmark index.
The S&P/TSX Composite Index closed up 121.98 points, or 0.67%, at 18,421.60. Materials rose 2.22%, but telco, financials, energy, real estate, and consumer staples also ended with gains. Helping to boost sentiment in Canada was surprising strength in fourth quarter GDP reported Tuesday, expanding by 9.6% on an annualized basis. Still, the economy shrank 5.4% for the full year, the worst annual reading of the postwar era.
Following strong gains in the prior session, technology shares on Wall Street dipped in the resumption of a rotation by investors out of stocks that outperformed due to the coronavirus pandemic and into others viewed as likely to do well as the economy recovers. The S&P 500 materials and consumer staples sector indexes rose.
Yields on the benchmark 10-year Treasury bonds have stabilized after hitting a one-year high last week. It was a similar case for Canadian government bond yields.
“Part of it is just because technology went up so much last year, and if interest rates are on the rise then the value of their future cash flows is diminished,” said Tom Hainlin, global investment strategist at U.S. Bank Wealth Management.
The S&P 500 on Monday logged its best day since June as markets cheered approval of a third COVID-19 vaccine in the United States and the U.S. House of Representatives’ green light for a $1.9 trillion coronavirus relief package.
The U.S. Senate will start debating President Joe Biden’s relief bill this week when Democrats aim to pass the legislation through a maneuver known as “reconciliation,” which would allow the bill to pass with a simple majority.
Apple dipped about 2% and Tesla declined more than 4%, with the two companies contributing the most to the S&P 500′s loss for the day.
The S&P 500 technology sector index dropped 1.6%, extending a pullback from late last month after a selloff in the U.S. bond market sparked fears over highly valued stocks. The consumer discretionary index dipped 1.3%, with Amazon falling 1.6%.
The Dow Jones Industrial Average fell 0.46% to end at 31,391.52 points, while the S&P 500 lost 0.81% to 3,870.29. The Nasdaq Composite dropped 1.69% to 13,358.79.
The Russell 2000 index of smaller companies declined 1.9%, trimming its gain in 2021 to about 13%, compared with the S&P 500′s rise of 3% in the same period.
Heavily shorted mortgage provider Rocket Companies surged 71% in its third straight day of gains as the stock drew interest on Reddit’s popular WallStreetBets.
Oil prices fell to their lowest in two weeks on expectations OPEC+ producers will ease supply curbs at their meeting later this week as economies start to recover from the coronavirus crisis.
OPEC Secretary General Mohammad Barkindo said the outlook for oil demand was looking more positive, particularly in Asia.
Brent futures fell 99 cents, or 1.6%, to settle at $62.70 a barrel, their lowest close since Feb. 12. The global benchmark has fallen about 7% from a 13-month peak hit last week. U.S. West Texas Intermediate (WTI) crude fell 89 cents, or 1.5%, to $59.75, its lowest close since Feb. 19. WTI has dropped about 6% since Feb. 25 when it closed at its highest since May 2019.
Gold prices rose on Tuesday, inching up from a more than eight-month low, as a retreat in the dollar and U.S. Treasury yields lifted demand for the safe-haven metal. Spot gold was up 0.8% at $1,736.46 per ounce by 1.52 p.m. ET, after falling to $1,706.70 earlier in the session, its lowest since June 15. U.S. gold futures settled up 0.6% at $1,733.60 per ounce.
Declining issues outnumbered advancing ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 2.64-to-1 ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 165 new highs and 57 new lows.
Volume on U.S. exchanges was 12.3 billion shares, compared with the 14.9 billion average for the full session over the last 20 trading days.
Read more: Stocks that saw action Tuesday - and why
Reuters, Globe staff
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