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Canada’s main stock index closed marginally lower on Thursday, as steep declines in cannabis stocks were offset by gains in industrials, technology and energy stocks. But both the S&P 500 and the Nasdaq eked out record closing highs after a topsy-turvy session, as investors focused on upbeat retail and technology earnings which outshone hawkish inflation comments from a Federal Reserve policymaker.

The Toronto Stock Exchange’s S&P/TSX composite index ended the day down 15.48 points, or 0.07%, at 21,637.54.

Cannabis producers Cronos Group and Tilray led declines, falling more than 12% after Barclays initiated coverage of both with “underperform” ratings. Other cannabis producers including Aurora Cannabis, Organigram Holdings and Canopy Growth also slid after a Washington Post report that a U.S. federal legalization attempt could fail as lawmakers disagree on its details.

That made health care the worst performing sector for the day, with a 6% decline. Technology and industrials had the biggest gains, of about 0.6%.

The Washington Post report “is causing some sell-off,” said Greg Taylor, portfolio manager at Purpose Investments, although increases in technology names, including Shopify, one of the top 10 gainers, masked some of that.

“Gold is down today on some profit-taking,” following recent gains as investors sought to hedge against soaring inflation, Taylor added.

The materials subindex, which includes precious and base metals, miners and fertilizer companies, lost 0.9% as spot gold prices fell 0.4%.

Energy companies Cenovus Energy and Canadian Natural Resources were among the 10 biggest gainers, climbing 2.7% and 1.8% respectively, following crude prices higher.

U.S. crude prices rose 0.4%.

Canadian stocks have added about 24% so far this year, broadly in line with the S&P 500 index on strong earnings and reopening optimism, but risks of interest rate hikes on soaring inflation have weighed on sentiment recently.

Insurer Definity Financial Corp jumped as much as 36% on its stock market debut after raising C$2.1 billion in Canada’s second-largest IPO.

On Wall Street, the Dow continued to play the laggard, registering its third decline this week, as Cisco Systems Inc weighed on the benchmark.

Inflation remains front and center for investors, and stock markets initially slipped after New York Federal Reserve Bank President John Williams said inflation is becoming more broad-based and that expectations for future price increases are rising.

Both the S&P and Nasdaq had rebounded by late morning though, with the latter supported by Nvidia. The chipmaker jumped 8.2% after beating quarterly estimates and forecasting strong fourth-quarter revenue.

The performance helped the Philadelphia semiconductor index advance 1.8% to hit its second record close in three sessions.

The S&P consumer discretionary sector led gains among its peers, ascending 1.5% as positive retail earnings from Macy’s and Kohl’s joined upbeat reports from Walmart Inc and Target Corp earlier this week.

Macy’s Inc surged 21.1%, its largest one-day percentage gain in decades, after it raised its annual earnings guidance and flagged plans for a potential spinoff of its ecommerce division.

Peer Kohl’s Corp advanced 10.6% after raising its forecast.

The S&P 500 retailing index gained 2.8% to break its record peak for the third session this week, as investors viewed the earnings as a signal of robust consumer demand that has persevered through rising inflation, and that retailers were set for a strong holiday season.

“The consumer is stronger than expected; it’s good news for the country as a whole. A stronger consumer is a reflection of a strong economic bounce,” said Mike Zigmont, head of research and trading at Harvest Volatility Management in New York.

Still, concerns over further increases in price pressure, along with uncertainty over the Fed’s plans for tightening have kept Wall Street muted this week.

“We definitely hit overbought territory and settling in is going to be healthy for us to take the next leg up,” said Eric Metz, chief investment officer of Chicago-based SpiderRock Advisors.

“Outside of Fed policy or large earnings disappointments, I think there’s some pretty stable footing underneath us, but markets can be fickle and so staying prudent is the name of the game right now.”

The Dow Jones Industrial Average fell 60.1 points, or 0.17%, to 35,870.95, the S&P 500 gained 15.87 points, or 0.34%, to 4,704.54 and the Nasdaq Composite added 72.14 points, or 0.45%, to 15,993.71.

The Dow lagged its peers on steep losses in network gear maker Cisco, which tumbled 5.5% after it forecast current-quarter revenue below expectations due to supply chain shortages and delays.

Visa Inc declined for a second day, with its 0.8% fall taking it to its lowest close since Feb. 3, after news that Inc may pare back its relationship with the payments company.

Volume on U.S. exchanges was 11.09 billion shares, compared with the 11.14 billion average for the full session over the last 20 trading days.

The S&P 500 posted 40 new 52-week highs and nine new lows; the Nasdaq Composite recorded 103 new highs and 407 new lows.

Read more: Stocks that saw action on Thursday - and why

Reuters, Globe staff

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