June 25th, 2024

U.S. markets fall led by technology weakness while TSX also moves lower

By Rosa Saba, The Canadian Press on October 26, 2023.

Bay Street in Canada's financial district is shown in Toronto on Wednesday, March 18, 2020. THE CANADIAN PRESS/Nathan Denette

TORONTO – Canada’s main stock index moved lower Thursday amid weakness in industrials, technology and battery metals, while U.S. markets also fell, led by losses in technology.

The S&P/TSX composite index closed down 72.54 points at 18,875.31.

In New York, the Dow Jones industrial average was down 251.63 points at 32,784.30. The S&P 500 index was down 49.54 points at 4,137.23, while the Nasdaq composite was down 225.62 points at 12,595.61.

“It’s a risk-off day,” said Philip Petursson, chief investment strategist at IG Wealth Management.

Several major companies in the U.S. are weighing on the markets after reporting earnings, he said.

Facebook owner Meta reported better profits than expected after the bell Wednesday, but saw its share price fall 3.73 per cent Thursday after noting some softness in advertising due to the Israel-Hamas war and giving what analysts said was a wider range for its revenue forecast than usual.

That echoed Alphabet’s stock-price tumble Wednesday, again after beating profits estimates.

Investors are reacting more to companies’ outlooks than to the actual numbers, said Petursson. Meta and Alphabet revenues are driven by advertising, so any suggestion that those companies are expecting softer revenue going forward could spell a weaker economic outlook, he said.

However, the appetite for risk is also down across the market, said Petursson, amid competing visions for what’s to come. While major companies are signalling weaker revenue, Thursday’s GDP report confirmed confidence in the U.S. economy.

U.S. economic growth accelerated to 4.9 per cent in the third quarter, driven by strong consumer spending.

As the U.S. Federal Reserve’s next rate decision looms, Petursson expects the central bank will hold steady, but noted that another hike isn’t out of the question for decisions further down the road.

“I believe that the Fed is a little bit more comfortable in the direction of inflation at this point. It really comes down to how patient the Federal Reserve will be,” said Petursson.

“In the next couple of meetings, they could say the U.S. economy can handle further rate increases to help drive inflation lower.”

Meanwhile in Canada, rate hikes are all but off the table, he said. The Bank of Canada announced Wednesday it was holding its key rate steady.

The Canadian dollar traded for 72.33 cents US compared with 72.56 cents US on Wednesday.

Oil prices moved downward Thursday in a continued show of volatility. Crude prices are being pulled in two directions, said Petursson: the fundamentals of supply and demand are sending prices higher, but economic uncertainty and the conflict in the Middle East are weighing on prices.

The December crude oil contract was down US$2.18 at US$83.21 per barrel and the December natural gas contract was up 10 cents at US$3.48 per mmBTU.

The December gold contract was up US$2.50 at US$1,997.40 an ounceand the December copper contract was down a penny at US$3.58 a pound.

– With files from The Associated Press

This report by The Canadian Press was first published Oct. 26, 2023.

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

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