Stock markets 'lack direction' edging lower Monday ahead of U.S. economic data

TORONTO – Stock markets in Canada and the U.S. moved lower Monday on a quiet trading day where economic data came into focus.

“I just think the market right now is really lacking a direction, lacking a catalyst,” said Allan Small, senior investment adviser at iA Private Wealth. “I don’t really see much of a catalyst other than seasonality.”

He noted that markets may see some positive momentum into the end of the year, but he doesn’t expect any large swings between now and Dec. 31.

“I’m not really counting on much of a Santa Claus rally,” Small said.

Canadian investors sifted through the latest data from Statistics Canada on Monday, which showed annual inflation rose 2.2 per cent in November, unchanged from the previous month and a tick below economists’ expectations.

While Small didn’t think the data had much of an impact on Canada’s stock market, he said the Bank of Canada missed an opportunity to lower borrowing costs at its latest meeting last week, where the central bank kept its policy rate at 2.25 per cent.

“I think the Bank of Canada could have easily cut. I don’t know why they didn’t. I think they missed out on an opportunity, especially with inflation pretty much at target,” he said.

The S&P/TSX composite index was down 43.95 points at 31,483.44.

Helping to keep U.S. indexes in check were stocks in the artificial-intelligence industry, which were mixed following last week’s scary swings.

Nvidia, the chip company that’s become the face of the AI boom, added 0.7 per cent. It was one of the strongest forces pushing upward on the S&P 500 after dropping 4.1 per cent last week.

But Oracle sank another 2.7 per cent following its 12.7 per cent tumble last week, which was its worst in more than seven years. Broadcom fell 5.6 per cent.

AI stocks have been shaky on worries that the billions of dollars flowing into chips and data centres may not produce a big enough payoff to make it worth it. The doubts are causing cracks for the industry, whose earlier surges were the main driver for the U.S. market’s rally to records.

Besides AI, the main focus on Wall Street this week will be on what several big updates on the U.S. economy’s health indicate.

On Tuesday, investors will be digesting the U.S. jobs report for November, with U.S. inflation data coming on Thursday. Such data is under the microscope because the U.S. Federal Reserve is trying to figure out if a slowing job market or high inflation is the bigger problem for the economy.

Under these conditions, Small said weak data may be good news for the market.

“Maybe the best case scenario is the Goldilocks scenario. Not too hot, not too cold, just right. So maybe not too weak of a jobs number, but not too strong of a job number might make sense,” he said.

In New York, the Dow Jones industrial average was down 41.49 points at 48,416.56. The S&P 500 index was down 10.90 points at 6,816.51, while the Nasdaq composite was down 137.76 points at 23,057.41.