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Wall Street’s main indexes fell on Thursday and a rally in U.S. stocks faded late in the session as investors debated whether equities were becoming bargains after a sell-off to start the year that has seen the Nasdaq fall into correction territory.

The TSX also closed lower, although losses were a little more modest. The Toronto Stock Exchange’s S&P/TSX composite index ended down 146.98 points, or 0.7%, at 21,058.18, its lowest closing level since Jan. 5.

“The non-stop inflation headlines, talk about interest rates have scared the market,” said Barry Schwartz, a portfolio manager at Baskin Financial Services.

Data on Wednesday showed that Canadian inflation climbed in December to a 30-year high.

Investors have raised bets on the Bank of Canada hiking interest rates at a policy announcement next week and are also concerned the Federal Reserve could become aggressive in controlling inflation.

The TSX gained 22% in 2021, its best yearly performance since 2009, supported by massive stimulus, vaccine rollouts and hopes of global economic recovery.

“The markets are deciding that the last few years people have made way too much money and it is time to give some of that back,” Schwartz said.

Broad-based gains included a 2.2% decline for consumer discretionary shares, while the basic materials group, which includes precious and base metals miners and fertilizer companies, ended 1.8% lower.

Energy was down 0.7% as an uptick in U.S. crude inventories arrested the recent move higher in oil prices. U.S. crude oil futures settled 0.1% lower at $86.90 a barrel.

Heavily weighted financials fell 0.4%.

Among 11 major sectors, utilities was the only one to end higher, gaining 0.2%.

Major U.S. indexes had been gaining solidly for much of the day, following a steep drop to start the week.

The Nasdaq on Wednesday closed more that 10% below its November all-time high, confirming it was in a correction. The tech-heavy index has now fallen nearly 12% from its record high and on Thursday closed at its lowest level since June.

“There seems to be a whole lack of conviction,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab. “The dip-buyers step in, but then they run out of momentum.”

The Dow Jones Industrial Average fell 313.26 points, or 0.89%, to 34,715.39, the S&P 500 lost 50.03 points, or 1.10%, to 4,482.73 and the Nasdaq Composite dropped 186.24 points, or 1.3%, to 14,154.02.

Of 11 major S&P 500 sectors, 10 finished lower, with the consumer discretionary sector falling 1.9%. Utilities eked out a 0.1% gain.

Putting a further damper on growth stocks, shares of Peloton Interactive tumbled nearly 24% after CNBC reported that the exercise bike maker is pausing production of its connected fitness products as demand wanes and the company looks to control costs. Peloton was one of the mainstays of the stay-at-home trade in 2020.

Stocks have gotten off to a rocky start in 2022, as a fast rise in Treasury yields amid concerns the Federal Reserve will become aggressive in controlling inflation has particularly hit tech and growth shares. The benchmark S&P 500 is down nearly 6% so far this year.

“I just think we’re in for a kind of rocky period here for the month of January,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “Valuations are high, rates are going up, the outlook is murky -- there’s more to worry about now than there was several months ago.”

Investors are also turning to fourth-quarter earnings reports as they start to roll in.

Shares of Travelers Cos rose 3.2% after the property and casualty insurer reported a record quarterly profit.

Baker Hughes shares climbed 1.6% after the company reported an adjusted quarterly profit and topped analysts’ earnings expectations as higher energy prices fuel demand for its equipment and services.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly rose last week, likely as a winter wave of COVID-19 infections disrupted business activity.

Declining issues outnumbered advancing ones on the NYSE by a 2.75-to-1 ratio; on Nasdaq, a 2.39-to-1 ratio favored decliners. The S&P 500 posted 12 new 52-week highs and eight new lows; the Nasdaq Composite recorded 18 new highs and 545 new lows. About 11.9 billion shares changed hands in U.S. exchanges, compared with the 10.1 billion daily average over the last 20 sessions.

Reuters, Globe staff

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