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Wall Street’s main indexes ended lower on Monday, with real estate and discretionary sectors leading broad declines, as investors digested comments from U.S. Federal Reserve officials about plans for interest rate hikes and looked for next catalysts after last week’s big stock market rally. Canada’s main stock index also closed down, pulling back from its highest level in more than 11 weeks, as lower oil prices weighed on energy shares.

Losses accelerated toward the end of the up-and-down session, with focus turning to Tuesday’s U.S. producer price index report and what it may say about the inflation picture.

Earlier on Monday, Fed Vice Chair Lael Brainard signaled that the central bank would will likely soon slow its interest rates hikes. Her comments somewhat buoyed sentiment for equities that had been dampened after Federal Reserve Gov. Christopher Waller on Sunday said the Fed may consider slowing the pace of increases at its next meeting but that should not be seen as a “softening” in its commitment to lower inflation.

A massive equity rally late last week was set off by a softer-than-expected U.S. inflation report that boosted investor hopes the Fed could dial back on its monetary tightening that has punished markets this year.

“There is still a sensitivity to Fed speak... One was a little hawkish, one was a little dovish,” said Eric Kuby, chief investment officer at North Star Investment Management Corp.

More Fed officials are due to speak later this week along with a slew of data, including on U.S. retail sales and housing, and earnings reports from major retailers.

“It just makes sense the market wants to pause and really both try to make sense of the trajectory (of Fed policy) and what the next drivers are going to be,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 189.70 points, or 0.9%, at 19,921.81.

The Bank of Canada has also been raising interest rates. Canada’s inflation report for October, due on Wednesday, could help guide expectations for further tightening.

The Toronto market’s energy group fell 1.4% as U.S. crude oil futures settled 3.5% lower at $85.87 a barrel, dragged down by a firmer U.S. dollar and as surging coronavirus cases in China dashed hopes of a swift reopening of its economy.

Technology declined 2.1%, while utilities ended nearly 2% lower. The sector was pressured by a 14% decline in the shares of Algonquin Power & Utilities Corp. It was the stock’s second straight day of sharp losses, after the company reported quarterly earnings on Friday that missed estimates.

On Wall Street, the Dow Jones Industrial Average fell 211.16 points, or 0.63%, to 33,536.7, the S&P 500 lost 35.68 points, or 0.89%, to 3,957.25 and the Nasdaq Composite dropped 127.11 points, or 1.12%, to 11,196.22.

The S&P 500 last week posted its biggest weekly percentage gain since late June, while the tech-heavy Nasdaq notched its best week since March.

Among S&P 500 sectors, real estate fell 2.7%, consumer discretionary dropped 1.7% and financials declined 1.5%.

In company news, Amazon shares fell 2.3% as The New York Times on Monday reported the company was planning to lay off about 10,000 people in corporate and technology jobs starting as soon as this week.

Shares of Biogen Inc and Eli Lilly gained 3.3% and 1.3%, respectively, after the failure of Swiss rival Roche’s Alzheimer’s disease drug candidate.

Declining issues outnumbered advancing ones on the NYSE by a 2.23-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners. The S&P 500 posted 15 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 72 new highs and 74 new lows. About 11.5 billion shares changed hands in U.S. exchanges, compared with the 12.1 billion daily average over the last 20 sessions.

Reuters, Globe staff

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