Canada’s main stock index fell to a three-week low on Thursday as higher bond yields pressured the technology and utilities sectors and the outlook of some high profile companies, such as Nutrien Ltd., disappointed investors.
The S&P/TSX composite index ended down 97.47 points, or 0.5%, at 20,120.74, its lowest closing level since July 12.
“It’s getting caught up a lot in this global decline,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
Wall Street closed nearly flat after a choppy session, as investors weighed economic data and earnings against rising bond yields following Fitch’s downgrade of the top-tier U.S. credit rating. The U.S. 10-year Treasury yield, a global benchmark, touched a nine-month high at 4.198%.
“We are getting into August, which is a seasonally weaker and more volatile time of the year for stocks,” Cieszynski said. “The Fitch Ratings downgrade of the U.S. is getting the blame but to me it is more like the spark that kicked off a correction that was probably overdue anyways.”
Canadian bond yields largely tracked U.S. Treasuries, with the five-year government bond yield - influential in the setting of fixed mortgage rates - gaining more than 10 basis points to a fresh 16-year high of 4.078%.
The Toronto market’s technology sector fell 1.5% and utilities was down 2.6%, hitting its lowest level since July last year.
Heavily weighted financials and the materials group, which includes precious and base metals miners and fertilizer companies, each declined 0.6%.
Nutrien shares fell 4% after the world’s biggest fertilizer firm forecast full-year profit below analysts’ estimates.
Canada Goose Holdings also disappointed Wall Street with its forecast for current-quarter sales. Shares of the luxury apparel brand fell 3.1%, while Bombardier Inc shares were down 8.5% as the company fell short on free cash flow.
The energy sector was a bright spot, gaining 1.5%, as oil settled 2.6% higher at $81.55 a barrel. Oil got a lift from steps taken by Saudi Arabia and Russia to keep supplies tight into September.
In economic news Thursday, a Labor Department report showed the number of Americans filing new claims for unemployment benefits increased slightly last week, while layoffs dropped to an 11-month low in July as labour market conditions remain tight.
Another report showed the U.S. services sector slowed in July, but businesses faced higher prices for inputs as demand continued to hold up. Richmond Federal Reserve President Thomas Barkin said U.S. inflation remained too high, although recent readings indicated price pressures easing.
Investors were waiting for July’s jobs reports for both the U.S. and Canada, due on Friday.
The Dow Jones Industrial Average fell 66.63 points, or 0.19%, to 35,215.89, the S&P 500 lost 11.5 points, or 0.25%, to 4,501.89 and the Nasdaq Composite added 11.77 points, or 0.08%, to 13,985.21.
Eight of the eleven main S&P 500 sectors declined, with more interest rates sensitive Utilities and Real Estate leading losses, dropping 2.3% and 1.4% respectively.
After the closing bell, Amazon.com shares surged 8% when the online retailer forecast third-quarter revenue above Wall Street expectations, boosted by its Prime Day sale event in July that drew price-conscious consumers to its platform.
Apple shares dipped less than 1% in extended trade after the iPhone maker reported quarterly results that beat forecasts.
Second-quarter earnings for companies in the S&P 500 are now expected to fall 5% from a year earlier, according to Refinitiv data.
In regular day trade, Qualcomm shares dropped 8.2% after a gloomy forecast signaled more pain for the biggest maker of smartphone chips from the ongoing slump in the consumer electronics market.
PayPal Holdings tumbled 12.3% as investors were disappointed by the payments firm’s quarterly operating margin, even as executives said they expect improvement.
U.S. travel stocks fell on downbeat quarterly reports from Spirit Airlines and Expedia that amplified concerns domestic demand may be easing after a strong rebound from pandemic lows.
Volume on U.S. exchanges was 12.08 billion shares, compared with the 10.5 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.84-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners. The S&P 500 posted 14 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 58 new highs and 88 new lows.
Reuters, Globe staff