Wall Street staged a late-day reversal Monday, shaking off deep early losses to end higher, as investors went bargain hunting in beaten-down technology and other growth stocks in the wake of Elon Musk’s blockbuster deal to acquire Twitter for US$44-billion.
But the Canadian benchmark index still ended well into the red, hampered by large declines in energy and resource stocks. Worries about the global economic outlook and a strengthening U.S. dollar weighed on commodities: U.S. crude oil fell 3.5 per cent, while prices for gold and industrial metals such as copper were down 2 per cent or more.
Commodities are priced in U.S. dollars and a strengthening greenback works against their demand prospects. The stronger greenback pushed the Canadian dollar to its weakest level in six weeks.
The day started on an ominous note, with Chinese shares suffering their worst selloff in more than two years as Beijing showed little signs of budging from its zero-Covid strategy even with increasing cases in major cities. Major stock indexes in China fell about 5 per cent.
The market mood brightened in afternoon trading as attention turned to the deal by Musk that will shift control of the social media giant to the world’s richest person. Twitter ended up 5.6 per cent.
“The Twitter news came and that was just a green light to start buying some of the growth names. They have been oversold for a while,” said Dennis Dick, a trader at Bright Trading LLC.
Bond yields also declined Monday after rising for much of last week, providing some relief to investors wary of rising borrowing costs and the economic toll they could have.
This week promises to be a pivotal one when it comes to corporate earnings.
Nearly a third of S&P 500 index firms are due to report this week. Of the 102 companies in the S&P 500 that posted earnings so far, 77.5 per cent reported above analysts’ expectations, according to Refinitiv data.
“Earnings are going to be crucial to the mindset of the of the average investor. The playbook was buy Apple, buy Netflix, buy Google and throw away the key, but that playbook is no longer working,” said Jake Dollarhide, chief executive officer at Longbow Asset Management.
The Dow Jones Industrial Average rose 0.7 per cent while the S&P 500 gained 0.57 per cent. The Nasdaq Composite climbed 1.29 per cent.
The S&P/TSX composite index ended down 174.49 points, or 0.8 per cent, at 21,011.89, its lowest closing level since March 1.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 3.1 per cent. The energy group also ended 3.1 per cent lower, pressured by sliding oil prices.
Technology was also a bright spot in Toronto, where the sector rose 2.3 per cent.
The TSX has lost more than 5 per cent since notching a record intraday high on April 5, getting pulled into a global stocks selloff on worries about aggressive interest rate hikes by the U.S. Federal Reserve, soaring inflation and the Ukraine crisis denting economic growth.
Volume on U.S. exchanges was 12.8 billion shares, compared with the 12.7 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.19-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored advancers. The S&P 500 posted 2 new 52-week highs and 50 new lows; the Nasdaq Composite recorded 26 new highs and 493 new lows.
With files from Reuters
Reuters, Globe staff
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Darcy Keith