S&P/TSX down more than 100 points, U.S. markets mixed ahead of rate decision

TORONTO — Canada’s main stock index fell more than 100 points Friday, led by losses in base metal and telecom stocks, while U.S. stock markets were mixed ahead of next week’s interest rate decision from the U.S. Federal Reserve.

This week, the Bank of Canada announced another outsized interest rate cut of half a percentage point while also signalling it plans to slow the pace of cuts going forward.

Allan Small, senior investment adviser at iA Private Wealth, said the central bank is juggling a lot of balls heading into the new year, including a faltering economy, a housing market that’s poised to heat up, and a U.S. Fed likely to cut much slower next year.

“If (the Bank of Canada) continues to cut when the U.S. doesn’t, where does that leave our dollar?” asked Small.

“They’re flying by the seat of their pants.”

The S&P/TSX composite index closed down 136.41 points at 25,274.30.

In New York, the Dow Jones industrial average was down 86.06 points at 43,828.06. The S&P 500 index was down 0.16 points at 6,051.09, while the Nasdaq composite was up 23.88 points at 19,926.72.

The Fed has done a better job of tamping down inflation while not harming the economy too much, said Small.

The Fed is expected to cut by a quarter-percentage point next week, and its path is clearer than the Bank of Canada’s, said Small.

“I don’t think they have much room to cut more,” he said, noting this week saw U.S. inflation data tick up from the month before.

“Most people think they’ll go 25 (basis points) and pause for a little while,” said Small.

“Would I be surprised to see them not cut at all? No, but I think the market would take that negatively.”

Heading into the last few weeks of the year, Small said if there’s a so-called Santa Claus rally, it may be more muted than usual.

“It’s quite possible we’ve taken some gains that we normally would have had in December, brought them forward into November, and now December might not be as strong as we normally see,” he said.

On Wall St., the Nasdaq did a little better than its U.S. peers as semiconductor company Broadcom saw its stock gain more than 24 per cent after reporting earnings.

“I think the commentary on the conference call really caused the stock to shoot up,” said Small.

The company gave a bright forecast for investors on the back of expected growth in artificial intelligence.

This week, Broadcom and Apple also announced a deal to develop a chip for AI.

The Canadian dollar traded for 70.27 cents US compared with 70.48 cents US on Thursday.

The January crude oil contract was up US$1.27 at US$71.29 per barrel and the January natural gas contract was down 18 cents at US$3.28 per mmBTU.

The February gold contract was down US$33.60 at US$2,675.80 an ounce and the March copper contract was down five cents at US$4.15 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Dec. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Rosa Saba, The Canadian Press