TSX moves lower Wednesday, U.S. stock markets continue to pare back from record highs
Posted Feb 28, 2024 12:34:40 PM.
Last Updated Feb 28, 2024 05:45:16 PM.
TORONTO — Canada’s main index moved lower Wednesday, led by weakness in base metals, while U.S. markets also continued to move down from last week’s highs.
U.S. markets rose to record heights last week after another blowout earnings report from chipmaker Nvidia.
“I think you’re just seeing things come a little bit off the highs, which is normal,” said Allan Small, senior investment adviser at iA Private Wealth.
It’s far from a sell-off, though, said Small — investors are likely just trimming some profit.
The S&P/TSX composite index closed down 75.13 points at 21,243.77.
In New York, the Dow Jones industrial average was down 23.39 points at 38,949.02. The S&P 500 index was down 8.42 points at 5,069.76,while the Nasdaq composite was down 87.56 points at 15,947.74.
The U.S. economy grew 3.2 per cent from October through December, according to a report from the Commerce Department, a slight downgrade from its initial estimate.
The report was pretty much as expected, said Small.
“Overall, there’s no mistake about it, the United States is growing,” he said.
“And they’re growing above what anyone would have expected at this time. And so that’s delaying the interest rate cuts.”
But the more important report this week is tomorrow’s core PCE, the Fed’s preferred gauge of inflation, said Small.
The ongoing economic strength, while technically bad news for anyone hoping for rate cuts, is a “win-win” for investors, he said.
That’s because the U.S. Federal Reserve has plenty of room to cut rates if it becomes necessary, he said.
“If the market should falter at this juncture, and things should get worse really, really quickly … then the Fed can cut rates.”
The same is true of the Bank of Canada, said Small, though the economic picture is much weaker than it is south of the border.
“I think the slowdown is coming on both sides of the border, just we’re experiencing (it) much quicker than the U.S.,” he said.
In Canada this week, bank earnings are continuing to roll in, with RBC and National Bank reporting Wednesday.
Though earnings have been mixed among the banks so far, they have one thing in common, noted Small: they’re setting aside more money for bad debt, preparing for a weaker consumer.
The Canadian dollar traded for 73.67 cents UScompared with 73.96 cents US on Tuesday.
The April crude oil contract was down 33 cents at US$78.54 per barrel and the April natural gas contract was up eight cents at US$1.89 per mmBTU.
The April gold contract was down US$1.40 at US$2,042.70 an ounceand the May copper contract was down a penny at US$3.84 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Feb. 28, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press