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June 27, 2017

At midday: TSX higher as energy helps offset broader losses - S&P, Dow pare losses as bank, consumer stocks rise

Canada’s main stock index see-sawed higher on Tuesday, buoyed by firmer hefty energy and financial stocks, but gains were dampened by losses across multiple other sectors.

At 11:27 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 14.56 points, or 0.09 per cent, at 15,330.58.

Five of the index’s 10 main groups advanced.

Energy stocks led with a 1.3-per-cent rise, as oil prices extended gains. U.S. crude rallied 2.2 per cent to $44.32 a barrel. Cenovus Energy rose 2.8 per cent to $9.41.

The heavily weighted financials group added 0.3 per cent, as modest advances by some of Canada’s largest banks led the index higher.

On the down side, the technology group was among the most influential index movers, retreating 0.9 per cent. The moves tracked a sell-off in U.S. tech shares, which had come under recent pressure over lofty valuations, and were also hit by a drop in Alphabet Inc stock following news that European Union antitrust regulators had hit the tech giant with a record $2.7-billion fine.

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In Toronto, Constellation Software Inc declined 1.2 per cent to $703.42 and Shopify Inc fell 1.5 per cent to $120.42.

Magna was the most influential index mover on the downside, falling 2.3 per cent to $59.16. The overall consumer discretionary group, which includes the auto parts supplier, eased 0.6 per cent. The materials group, home to miners, lumber and fertilizer companies, lost 0.1 per cent, with Agnico Eagle Mines Ltd sliding 1.7 per cent to $61.55.

The S&P 500 and the Dow Jones Industrial Average pared early losses in late morning trading on Tuesday as bank and consumer stocks rose on robust consumer confidence data, while the Nasdaq Composite was dragged lower by a fall in technology shares.

Data showed consumer confidence for June rose more-than-expected, which could bolster the Federal Reserve’s case for another rate hike this year.

However, a steep fall in oil prices and a flattening yield curve have added to concerns over inflation, which remains below the Fed’s 2-per-cent target.

“The consumer remains confident and given that consumers drive two-thirds of the economy, that to me says, perhaps the news of a slowdown may be oversold,” said Brad McMillan, Chief Investment Officer for Commonwealth Financial.

The financial index rose 0.89 per cent, leading the gainers among the major S&P sectors, as investors expect the central bank to look through a slowdown in inflation and continue on their current path for rate hikes.

Bank of America was up 1.4 per cent and JPMorgan rose 0.8 per cent, providing the biggest boost to the S&P.

The consumer discretionary index sector inched up 0.12 per cent, with Home Depot boosting the Dow.

Fed Chair Janet Yellen is scheduled to take part in a discussion on global economic issues in London at 1 p.m. ET. Investors expect Ms. Yellen to offer more insight into the state of the U.S. economy.

“I think at this point the Fed is more or less committed to raising rates as they’re more worried about being behind the curve and reloading the gun in case of a recession,” added Mr. McMillan.

Philadelphia Fed President Patrick Harker said on Tuesday the Fed rightly plans to raise rates once more this year, given recent inflation weakness is likely temporary.

The Dow Jones Industrial Average was up 21.18 points, or 0.1 per cent, at 21,430.73, the S&P 500 was up 0.36 points, or 0.01 per cent, at 2,439.43.

The Nasdaq Composite index was down 15.49 points, or 0.25 per cent, at 6,231.66.

The technology index fell 0.39 per cent due to a drop in the shares of Apple, Microsoft and Alphabet.

Alphabet fell 1 per cent to $962.64 after EU antitrust regulators hit the tech giant with a record $2.7-billion fine.

Since the beginning of the year, the tech index has jumped about 19 per cent, making it the biggest force behind the S&P’s record-setting rally.

However, the sector has come under pressure of late over concerns about lofty valuations.

Sprint rose 5.6 per cent after the fourth-largest U.S. wireless service provider was said to be in talks with Charter Communications and Comcast about a wireless partnership. Comcast and Charter were down about 0.35 per cent.

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