Canada’s main stock index fell on Thursday, led by declines for mining shares, as investors weighed prospects of the Federal Reserve dialing back its huge stimulus and awaited the outcome of next week’s federal election.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 91.69 points, or 0.4%, at 20,602.10.
“There’s probably some more nervousness about tapering,” said Matt Skipp, president of SW8 Asset Management, who was nonetheless doubtful that the Federal Reserve would for now “say anything to surprise the markets.”
Increased focus on the timing of the Fed’s asset purchase reduction came as data showed U.S. retail sales unexpectedly increasing in August. The Fed is due to make an interest rate decision next week.
U.S. government bond yields and the U.S. dollar rose, while base and precious metal prices fell, with gold down 2.2% and copper sliding 3.2%.
The materials group, which includes precious and base metals miners and fertilizer companies, lost nearly 3%. Energy ended 0.9% lower.
Foreign investors are growing more worried that Canada’s federal election on Monday could result in a deadlock that hampers Ottawa’s response to the COVID-19 pandemic and further slows the economic recovery from the crisis.
Another concern for investors is rising inflation, with data on Wednesday showing that Canadian inflation has accelerated to its highest level since March 2003.
Still, the Bank of Canada expects inflation to cool as temporary factors pushing up prices fade.
“If inflation comes with subdued interest rates, it’s good for Canadian stocks, it’s good for commodity prices,” Skipp said.
The TSX has advanced about 18% this year.
On Wall Street, the S&P 500 ended slightly lower, paring losses in late trading after the unexpectedly strong retail sales data underscored the strength of the U.S. economic recovery.
The three major indexes spent much of the day in negative territory as rising U.S. Treasury yields pressured market-leading tech stocks, and the rising dollar weighed on exporters.
Amazon.com Inc, buoyed by solid online sales in the Commerce Department’s report, helped push the Nasdaq into positive territory.
“Looking at today, clearly we had positive news from retail sales and it looks as if the massive slowdown in the economy is not materializing as a lot of people expected,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
“It’s a nice reminder that the economy is still taking two steps forward for each step back even amid the COVID concerns,” Detrick added.
Economically sensitive transports and microchips were among the outperformers.
Data released before the opening bell showed an unexpected bump in retail sales as shoppers weathered Hurricane Ida and the COVID Delta variant, evidence of resilience in the consumer, who contributes about 70% to U.S. economic growth.
“Once again, it shows the U.S. consumer continues to spend and continues to help this economy grow,” Detrick said.
The Dow Jones Industrial Average fell 63.07 points, or 0.18%, to 34,751.32; the S&P 500 lost 6.95 points, or 0.16%, at 4,473.75; and the Nasdaq Composite added 20.40 points, or 0.13%, at 15,181.92.
Eight of the 11 major sectors in the S&P 500 ended lower, with materials suffering the largest percentage drop.
The consumer discretionary spending sector posted the biggest gain, with Amazon.com doing the heavy lifting.
Apparel company Gap Inc gained 1.6%. Online marketplace Etsy Inc and luxury accessory company Tapestry Inc rose 3.1% and 1.9%, respectively.
Ford Motor Co rose 1.4% after it announced plans to boost production of its F-150 electric pickup model.
Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers. The S&P 500 posted nine new 52-week highs and one new low; the Nasdaq Composite recorded 82 new highs and 94 new lows. Volume on U.S. exchanges was 9.37 billion shares, compared with the 9.44 billion average over the last 20 trading days.
Oil prices steadied on Thursday after hitting a multi-week high a day earlier as the threat to U.S. Gulf crude production from Hurricane Nicholas receded.
Brent crude ended the session up 21 cents, or 0.3%, at $75.67 a barrel. On Wednesday Brent touched $76.13, its highest since July 30.
U.S. West Texas Intermediate (WTI) ended the session unchanged at $72.61 a barrel after climbing to the highest since Aug. 2 on Wednesday.
“With prices now back around summer highs, we are seeing some profit taking kicking in, but the rally continues to look well supported,” said Craig Erlam, senior market analyst at OANDA.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.