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The Canadian benchmark stock index closed lower for a fifth day, losing a further 1% as energy and materials stocks tumbled on falling commodity prices. It has now lost 5.1%, or just over 1,000 points, during the past five sessions.

Energy lost 2.5% and materials 2.8%. Oil prices tumbled more than 3%, as new COVID-19 lockdown measures in China added to worries that high inflation and interest rate hikes are denting fuel demand. U.S. West Texas Intermediate crude futures fell US$2.94 to US$86.61 per barrel. Gold prices fell below the key US$1,700 level for the first time since July, as a rising U.S. dollar and expectations for aggressive interest rate hikes eroded its appeal. Spot gold was down 0.8% at $1,696.76 per ounce in afternoon trading.

Most other TSX sectors were also lower, although consumer staples gained 1.6%, in a sign investors are taking a defensive stance in the market.

Financials lost 0.6%. Among the decliners was Canadian Imperial Bank of Commerce, falling by 1.1%, marking its 10th day in a row of losses. That’s its longest losing streak in 15 years, according to Bloomberg data. It has fallen just over 10% during the period, which included its latest earnings report last week that mildly beat Street expectations.

Other Canadian banks have also been under pressure over the last 10 days. The Bank of Nova Scotia is down just over 12% and the S&P/TSX Composite Financials Sector GICS Level 1 Index is down just over 8%.

Turquoise Hill Resources was a top advancer in Toronto, spiking nearly 14% after reaching an agreement to sell itself to Anglo Australian megaminer Rio Tinto International Holdings. But uncertainty swirls over whether the deal will succeed, with a prominent minority shareholder already indicating it intends to vote against the deal.

Meanwhile, a late rally helped the S&P 500 snap a four-session losing skid on Thursday with investor focus turning to a key report on the labour market on Friday.

Stocks had been solidly lower for most of the session, after data showed weekly jobless claims fell more than expected to a two-month low last week and layoffs dropped in August, giving the Fed a cushion to continue raising rates to slow the labor market. Investors now await the monthly nonfarm payrolls report on Friday for more evidence on the labor market.

Economists polled by Reuters see a jobs increase of 300,000, while Wells Fargo economist Jay Bryson revised his forecast for nonfarm payrolls to 375,000 from 325,000 and Morgan Stanley economist Ellen Zentner expects August payrolls of 350,000.

“You’ve got a market that is oversold ... and a catalyst for a rally or at least not to sell off would be a weaker employment report especially with regard to wages,” said Quincy Krosby, chief global strategist for LPL Financial in Charlotte, North Carolina. “The market is as data-dependent as the Fed. It’s going to be on guard for every data release that could suggest when the Fed could be closer to finishing.”

The S&P managed to bounce in the latter stages of trading after hitting a low of 3,903.65, near what some analysts see as a strong support level for stocks at 3,900.

The Dow Jones Industrial Average rose 145.99 points, or 0.46%, to 31,656.42; the S&P 500 gained 11.85 points, or 0.30%, to 3,966.85; and the Nasdaq Composite dropped 31.08 points, or 0.26%, to 11,785.13.

The benchmark S&P index has stumbled nearly 6% over the prior four sessions, which began after Fed Chair Jerome Powell signaled on Friday the central bank will remain aggressive raising rates to fight inflation even after consecutive hikes of 75 basis points, a message echoed by other Fed officials in recent days.

Despite the gains, the tone was defensive, with health care up 1.65%, and utilities, which gained 1.42%, the leading sectors to the upside.

Weighing on the tech sector, down 0.48%, were chipmakers as the Philadelphia semiconductor index dropped 1.92%, led by a 7.67% tumble in shares of Nvidia as the biggest weight on the S&P 500, and a 2.99% fall in Advanced Micro Devices after the United States imposed an export ban on some top AI chips to China.

Other economic data showed a further easing in price pressures, while manufacturing grew steadily in August, thanks to a rebound in employment and new orders.

Traders expect a 73.1% chance of a third straight 75 basis points increase in rates in September and expect it to peak around 3.993% in March 2023.

The expected path of Fed rate hikes has increased worry the central bank could potentially make a policy mistake and raise rates too high, tilting the economy into a recession, even if inflation shows signs of abating.

Investors have also become more concerned about corporate earnings in a rising rate environment that has also stoked a rally in the U.S. dollar. Hormel Foods Corp fell 6.56% after the packaged foods maker cut its full-year profit forecast.

Volume on U.S. exchanges was 11.19 billion shares, compared with the 10.51 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 2.82-to-1 ratio; on Nasdaq, a 1.96-to-1 ratio favored decliners. The S&P 500 posted one new 52-week high and 35 new lows; the Nasdaq Composite recorded 29 new highs and 356 new lows.

In credit markets, benchmark U.S. Treasury 10-year yields rose by over 13 basis points to an over two-month high of 3.26% ahead of the release of the Labor Department report Friday.

With files from Reuters

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