TORONTO – Canadian and U.S. markets lost ground Thursday following a sharp increase in oil prices after attacks on two Saudi oil tankers in the Red Sea.
Carol Schleif, chief market strategist at BMO Private Wealth, said that markets were facing a “wall of worry” with stocks seeing pressure from several factors, including higher oil prices and nervousness about the AI trade.
“It’s important to take a step back and realize markets have done really well, year-to-date. The TSX was at new highs recently, the S&P 500’s high, you’ve seen a big transition in leadership,” she said.
In the oil market, the September crude oil contract for North American benchmark West Texas Intermediate was up US$5.36 at US$92.19 per barrel. The price for a barrel of Brent crude oil, the international standard, jumped seven per cent to settle at US$100.69.
Underscoring the importance of the sea route for the economy, U.S. President Donald Trump threatened “major military punishment” against the Houthi rebels in Yemen, who are backed by Iran, if they keep attacking ships.
Schleif said oil prices could “stay more troubled for longer” given the strain on oil reserves and hostilities both in and outside of the Strait of Hormuz.
It was just a few weeks ago that Brent had dropped below US$72 per barrel, roughly back to where it was before the United States and Israel attacked Iran to begin their war, on hopes that a wind-down in the war would fully reopen the Strait of Hormuz.
It’s possible the jumps in oil prices will worsen inflation, which in turn could push the U.S. Federal Reserve and other central banks to raise interest rates. The Bank of Canada has so far seemed content to stay put on rates, saying there are few signs so far that inflationary pressure from the Iran war is spilling into other consumer prices.
The S&P/TSX composite index was down 292.45 points at 35,192.66. In Canada, the TSX saw broad-based losses led by weakness in technology stocks. The energy and utilities sectors were the only ones to see gains.
On the trade front, Prime Minister Mark Carney huddled with premiers Thursday to prepare a response to fresh tariff threats from the United States. Carney told reporters ahead of his meeting with the first ministers that Canada is “in a stronger position than we were when this trade war started,” thanks to the focus of the people around the table.
Trump signed a series of executive orders on Monday that would impose a separate 50 per cent tariff on a range of goods coming from Canada.
“I’ve been warning our base here for months that with the CUSMA negotiations going on, expect to see inflammatory headlines under the escalate-to-de-escalate scenario,” Schleif said.
In the U.S. market, sharp drops for two of Wall Street’s most influential companies, Alphabet and Tesla, yanked the U.S. stock market lower.
In New York, the Dow Jones industrial average was down 506.93 points at 51,711.65. The S&P 500 index was down 90.66 points at 7,408.30, while the Nasdaq composite was down 553.21 points at 25,137.69.
One of the heaviest weights on the U.S. stock market was Tesla, which tumbled 14.5 per cent after Elon Musk’s electric-vehicle company reported a weaker profit for the latest quarter than analysts expected. Because it’s one of the largest stocks in the S&P 500 by market value, its stock has more influence on the index than nearly every other.
Another heavily weighted stock, Google owner Alphabet, fell 7.1 per cent even though the company delivered stronger profit and revenue than analysts expected.
Investors focused instead on how much Alphabet is planning to spend on artificial-intelligence investments. It raised its forecast for capital spending over the full year after its investments last quarter doubled to nearly US$45 billion from a year earlier.
The Canadian dollar traded for 71.01 cents US compared with 70.98 cents US on Wednesday.
The August gold contract was down US$101.70 at US$4,050.20 an ounce.
This report by The Canadian Press was first published July 23, 2026.
— With files from The Associated Press.
Companies in this story: (TSX: GSPTSE, TSX: CADUSD)
