The TSX Tuesday closed at its second record high of the week - but this time, gains were powered by advances in sectors beyond materials and energy. The Canadian benchmark rose even as U.S. stocks ended lower, as a sharp decline in telecom stocks and weak housing starts data overshadowed better-than-expected earnings from Walmart and Home Depot.
The S&P/TSX Composite Index closed up 39.52 points, or 0.20%, at 19,514.17. Materials and energy reversed course after leading the rally on Monday, falling 0.37% and 1.03%, respectively.
Unlike in the U.S., tech performed solidly in Canada, gaining 1.14% thanks to Shopify rallying 3.25%. The Canadian tech darling spiked during afternoon trading after Alphabet Inc. announced it is introducing a new, simplified process that helps the Ottawa-based company’s 1.7 million merchants “feature their products across Google in just a few clicks.”
The TSX energy sector was under pressure after oil tumbled from a two-month high amid media reports said the United States and Iran have made progress on reviving a deal restricting the OPEC country’s nuclear weapons development, which would boost crude supply. Prices plunged on the reports that Russian ambassador to the United Nations Mikhail Ulyanov said significant progress had been made, but losses stopped after he said on Twitter that negotiators need more time to finalize an agreement.
After falling more than $2 a barrel, Brent crude settled down 75 cents, or 1.1%, at US$68.71 a barrel U.S. West Texas Intermediate crude settled down 78 cents, or 1.2%, to $65.49.
If the United States lifts sanctions on Iran, the country could boost oil shipments, adding to global supply.
On Wall Street, AT&T Inc shed 5.8%, among the biggest percentage decliners in the benchmark S&P 500. It extended declines from Monday, when the telecoms firm said it would cut its dividend payout ratio as a result of its $43 billion media asset deal with Discovery Inc.
T-Mobile and Verizon Communications also dropped 3.71% and 1.31%.
Eight of 11 major S&P sectors ended the session in the red, with Energy and Industrials having largest percentage decline, according to Refinitiv data. Utilities were basically flat.
The three main indexes opened higher after Walmart, the world’s biggest retailer, raised its full-year earnings forecast and Home Depot reported quarterly same-store sales above estimates.
“Those are both emblematic of strength in the corporate sector and also of the consumer. I mean, you can’t have Walmart and Home Depot have blowout earnings without the consumer really stepping up spending stimulus checks, adopting ecommerce, as well as getting back into stores”, said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky. “And a lot of the bull thesis for the market right now is still built on a really strong reopening of the economy.”
Despite its strong results, Home Depot’s shares went down 1.02%, under pressure due to the lack of a solid outlook and the housing data.
Latest data showed U.S. homebuilding fell more than expected in April, likely pulled down by soaring prices for lumber and other materials.
Minutes from the Fed’s April policy meeting will be parsed on Wednesday for the central bank’s view of the economy.
“The market is bracing for a transition,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. “So there’s a little bit of de-risking going on.”
Wall Street has been volatile in recent days, with investors worried that an overheating economy could prompt the Federal Reserve to rein in its monetary support following a spike in volatility last week after strong inflation readings.
The Dow Jones Industrial Average fell 267.13 points, or 0.78%, to 34,060.66, the S&P 500 lost 35.46 points, or 0.85%, to 4,127.83 and the Nasdaq Composite dropped 75.41 points, or 0.56%, to 13,303.64.
Fund managers recently trimmed their overweight positions on technology stocks to a three-year low as inflation worries left growth stocks vulnerable to a pullback, and turned overweight on UK stocks for the first time in seven years, a survey from Bank of America showed.
Volume on U.S. exchanges was 10.01 billion shares, compared with the 10.48 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored advancers.
The S&P 500 posted 43 new 52-week highs and no new lows; the Nasdaq Composite recorded 105 new highs and 50 new lows.
Read more: Stocks that saw action Tuesday - and why
With files from Reuters
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