A woman walks across an intersection near monitors showing the Japanese yen against the U.S. dollar at a securities firm in Tokyo, Thursday, July 27, 2023. THE CANADIAN PRESS/AP-Hiro Komae
TORONTO – Canada’s main stock index was down almost 200 points Thursday amid broad-based weakness led by telecom and utilities stocks, while U.S. markets also moved lower.
Markets held in throughout the morning before sliding downward throughout the afternoon.
The S&P/TSX composite index closed down 176.17 points at 20,385.47.
In New York, the Dow Jones industrial average was down 237.40 points at 35,282.72. The S&P 500 index was down 29.34 points at 4,537.41, while the Nasdaq composite was down 77.17 points at 14,050.11.
Equity markets appeared to be taking a breather to the downside after a slew of earnings reports and a highly anticipated interest rate hike, said Brian Madden, chief investment officer with First Avenue Investment Counsel.
“By most measures, the U.S. markets are pretty overbought after a breathtaking run off the march lows,” said Madden.
“Certainly the U.S. indices are in need of a breather.”
Many of the big U.S. bellwether stocks have already reported second-quarter earnings, with tech names and banks mostly surprising above expectations, said Madden, but there’s more still to come, including big tech names that participated in 2023’s narrow rally like Apple and Nvidia.
Canadian companies are also starting to roll out second-quarter reports in earnest this week, with rail companies, Shopify and the banks among the releases investors will be eyeing this season, he said.
However, the thread running through markets Thursday amid all the earnings reports was U.S. GDP. Markets were higher in the morning as they reacted to an advance estimate for the second quarter that saw gross domestic product increase at an annualized rate of 2.4 per cent, higher than expected, said Madden. But throughout the day markets weakened as they digested what that could mean for the Federal Reserve’s efforts to fight inflation with higher interest rates.
“It’s a double-edged sword,” said Madden – investors want to see stronger corporate profits but also want the Fed to step on the brakes, and the central bank has made it clear that economic data will be driving its upcoming decisions.
“All of this sort of fans the flames, reignites the ongoing speculation.”
The Canadian dollar traded for 75.75 cents US compared with 75.64 cents US on Wednesday.
The September crude oil contract was up US$1.31 at US$80.09 per barreland the September natural gas contract was down 10 cents at US$2.60 per mmBTU.
The August gold contract was down US$24.40 at US$1,945.70 an ounce and the September copper contract was down three cents at US$3.88 a pound.
This report by The Canadian Press was first published July 27, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
