Skip to main content

Canada’s benchmark stock index fell further below the 20,000 mark Tuesday after a volatile day of trading that saw North American indexes swing in and out of the red.

Investors lacked conviction ahead of fresh U.S. inflation data due out Wednesday and as a breathtaking rise in bond yields this year took a pause.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 109.63 points, or 0.6%, at 19,890.06, its lowest closing level since July 2021.

It was down nearly 10% from its March 29 closing record high. A correction is confirmed when an index closes 10% or more below its record closing level.

“The commodity trade is weighing on the TSX in addition to the equity volatility that we are seeing in other places around the world,” said Philip Petursson, chief investment strategist at IG Wealth Management.

The Toronto market has fallen 6.3% since the start of the year, which is much less than for some other major global benchmarks. The S&P 500 is down 16.1%.

“At this point now it is starting to look overdone,” Petursson said. “We have seen an adjustment in valuations far beyond what I think rates and inflation would justify.”

The energy group fell 0.4%, with Suncor Energy Inc down 1.3% despite exceeding analysts’ estimates for first-quarter profit.

U.S. crude prices settled 3.2% lower at $99.76 a barrel as the market balanced demand concerns with impending European Union sanctions on Russian oil, while gold was down 0.9% at about $1,837 per ounce.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.5%.

Among other individual names, Bausch Health Companies Inc tumbled 27.1%, after posting disappointing first-quarter results just a few days after the Bausch + Lomb Corp spinoff IPO.

On Wall Street, the S&P 500 and Nasdaq ended higher, with big growth shares rising after the previous day’s selloff as Treasury yields tumbled. The Dow ended lower.

Worries that the U.S. Federal Reserve may have to move more aggressively to curb inflation have driven the recent selloff in the market. A host of other concerns have added to the pressure.

Shares of Apple Inc rose 1.6% and gave the S&P 500 and Nasdaq their biggest boosts.

The Dow Jones Industrial Average fell 84.96 points, or 0.26%, to 32,160.74, the S&P 500 gained 9.81 points, or 0.25%, to 4,001.05 and the Nasdaq Composite added 114.42 points, or 0.98%, to 11,737.67.

Technology and growth stocks, whose valuations rely more heavily on future cash flows, have been among the hardest hit in the recent selloff. The Nasdaq is down about 25% for the year so far.

S&P 500 technology rose 1.6% on the day and led S&P 500 sector gains. The S&P 500 growth index was up 0.9%, while the S&P 500 value index was down 0.4%.

Investors digested comments from Cleveland Fed President Loretta Mester, who said the U.S. economy will experience turbulence from the Fed’s efforts to bring down inflation running at more than three times above its goal and recent volatility in the stock market would not deter policymakers.

U.S. President Joe Biden in a speech Tuesday addressing high inflation said he was considering eliminating Trump-era tariffs on China as a way to lower prices for goods in the United States.

Among the day’s gainers, Pfizer Inc shares rose 1.7% after it said it will pay $11.6 billion to buy Biohaven Pharmaceutical Holding Co. Biohaven shares jumped 68.4%.

On the down side, Peloton Interactive Inc dropped 8.7% as the fitness equipment maker warned the business was “thinly capitalized” after it posted a 23.6% slide in quarterly revenue.

Volume on U.S. exchanges was 15.45 billion shares, compared with the 12.55 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored decliners. The S&P 500 posted 1 new 52-week highs and 63 new lows; the Nasdaq Composite recorded 19 new highs and 1,066 new lows.

After hitting 3.2% on Monday, the 10-year U.S. Treasury yield has fallen back to around 3%. Some investors are starting to think a possible slowdown in price pressures as well as support from yield-seeking buyers could soon put a ceiling - or at least a pause - on rising yields.

The U.S. Federal Reserve hiked its benchmark overnight interest rate by 50 basis points last week and announced it would begin to trim its balance sheet next month to counter unabated inflation.

Yet for some investors most of the inflation-driven weakness in bond markets has been priced in and, while there is still room for upside, yields could start subsiding soon, as financial conditions tighten on the back of the Fed’s actions.

“We’re probably getting closer to the peak in terms of yields,” said John Madziyire, a senior portfolio manager and head of US Treasuries and Inflation within Vanguard’s Fixed Income Group.

“Yields can still go higher as a function of the fact that volatility is so high, but we’re probably getting close to a point where we’re pricing in the highs in yields and buyers will start being more attracted to buying at these levels,” he said.

Reuters, Globe staff

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.