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Market News The close: TSX falls as CannTrust, healthcare stocks drop; S&P closes above 3,000 for the first time

Canada’s main stock index slid on Friday, as losses in healthcare stocks led by cannabis producer CannTrust, couldn’t be offset by gains by consumer discretionary, industrial and materials stocks.

But U.S. stocks continued to rise and closed at record highs.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 39.78 points, or 0.24 per cent, at 16,488.12, according to unofficial figures.

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Healthcare stocks dropped 4.5 per cent, the most among the major sectors.

CannTrust Holdings Inc. tumbled 17.3 per cent, after the company suspended sales of cannabis products. Earlier this week, the firm said Canada’s health regulator found that it produced marijuana in unlicensed facilities.

The company’s losses were closely followed by fellow cannabis producer Canopy Growth Co., down 8 per cent. Cronos was off 6.2 per cent and Hexo fell 5.4 per cent.

Utilities stocks were down 1 per cent as Superior Plus fell 2.1 per cent and Emera was off 1.2 per cent. Technology stocks fell 0.8 per cent as Kinaxis fell 1.9 per cent and Shopify fell 1.7 per cent. Consumer staples stocks were down 0.5 per cent with Premium Brands down 1.4 per cent and Cott Corp. off 1.2 per cent.

The materials sector, which includes precious and base metals miners and fertilizer companies, was up 0.4 per cent.

Gold prices inched higher on Friday as investors shrugged off concerns that stronger-than-expected consumer inflation in the United States could influence the U.S. central bank’s decision on aggressive monetary policy easing. Spot gold rose 0.7 per cent to US$1,412.88 per ounce, having touched US$1,413.41 earlier in the session. Prices have risen nearly 1 per cent so far this week. U.S. gold futures settle 0.4 per cent up at US$1,412.20 per ounce.

The Canadian dollar strengthened to a near nine-month high against its U.S. counterpart on Friday, adding to its gains since mid-week, when the Bank of Canada made clear it had no intention of easing monetary policy. It was trading around 76.7 cents US.

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The signal from Canada’s central bank that interest rates are on hold has contrasted with dovish guidance from the U.S. Federal Reserve.

In stocks, Aritzia Inc. jumped 7.3 per cent after reporting first-quarter results.

Alaris Royalty gained 2.1 per cent rise after brokerage CIBC upgraded the company’s shares to “outperform” from “neutral.”

All three major U.S. stock indexes posted record closing highs on Friday as solid expectations for an interest-rate cut from the Federal Reserve continued to propel shares while investors awaited next week’s kickoff of the corporate earnings season.

The Dow Jones Industrial Average rose 243.82 points, or 0.9 per cent, to 27,331.9, the S&P 500 gained 13.79 points, or 0.46 per cent, to 3,013.7, closing above the 3,000-point level for the first time. The Nasdaq Composite added 48.10 points, or 0.59 per cent, to 8,244.14.

For the week, the S&P rose 0.78 per cent, the Dow gained 1.52 per cent, and the Nasdaq added 1.01 per cent.

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In his two-day testimony before Congress, Federal Reserve Chairman Jerome Powell said the U.S. economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war and that the central bank stood ready to “act as appropriate.”

The S&P 500 traded above the 3,000 level for a third straight session, with industrial and consumer discretionary posting gains of 1 per cent or more.

With firm expectations for interest-rate cuts in place, the focus among several investors has turned to the corporate earnings season as large U.S. banks, including Citigroup Inc and JPMorgan Chase & Co, are set to report next week.

“All this week has been the Federal Reserve’s influence,” said Mark Kepner, equity trader at Themis Trading in Chatham, New Jersey. “At the position we’re at here, we could see ourselves declining a bit if earnings are not that good.”

Analysts currently estimate that S&P 500 companies will report a 0.4 per cent dip in second-quarter earnings, according to Refinitiv IBES data.

Data for U.S. producer prices in June showed the smallest annual increase in producer inflation in nearly 2-1/2 years and a slowdown in underlying producer prices, which suggested that overall inflation could remain moderate for a while.

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Ford Motor Co. shares gained 2.9 per cent after the automaker and Volkswagen AG said they would join forces to develop autonomous and electric cars.

Johnson & Johnson shares slid 4.2 per cent after Bloomberg reported that the U.S. Justice Department is pursuing a criminal probe into whether the healthcare conglomerate lied about potential cancer risks of its talcum powder.

Johnson & Johnson’s slide dragged down healthcare shares, whose 1.2 per cent decline was the biggest among S&P 500 sectors.

Illumina Inc. shares tumbled 16.1 per cent, the most among S&P 500 companies, after the gene sequencing company’s preliminary second-quarter revenue came in below analyst estimates.

With files from Reuters

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