TORONTO – Canada’s main stock index moved lower Tuesday, led by losses in technology, while the sector led U.S. markets to erase Monday’s gains.
The S&P/TSX composite index closed down 69.90 points at 24,929.89.
In New York, the Dow Jones industrial average was down 178.20 points at 42,528.36. The S&P 500 index was down 66.35 points at 5,909.03,while the Nasdaq composite was down 375.30 points at 19,489.68.
U.S. markets erased Monday’s tech-led gains after a pair of economic reports came in stronger than expected, further dampening investor hopes for more interest rate cuts from the U.S. Federal Reserve.
One report showed U.S. employers advertised more job openings at the end of November than expected, while services activity in December grew faster than forecast.
Both reports countered the narrative that growth in the U.S. is stabilizing, said Tamsin Wilding, principal and portfolio manager for fixed income at Leith Wheeler Investment Counsel Ltd.
“I think overall, they’re signalling that … growth is stabilizing, that the economy is stabilizing,” she said.
“We’re not seeing a further deterioration, and we’re potentially seeing a reacceleration.”
The U.S. Federal Reserve’s most recent forecast saw two more cuts in 2025, fewer than previously predicted. Market bets forecast potentially fewer than two, according to data from CME Group.
The jobs report Friday could cement those expectations, said Wilding.
“If we get further justification of the stabilization theme, then that means that the Fed has no need to rush any further easing from here, because the goal at the moment is protecting that downside growth risk while also balancing that upside inflation risk,” she said.
The strong data also adds to the continuing divergence between the U.S. and Canada, said Wilding.
“Both the markets and the economies are on quite different trajectories,” she said.
This week, Canadian markets are grappling with political uncertainty after Prime Minister Justin Trudeau announced he’s resigning Monday, and with U.S. president-elect Donald Trump continuing to needle Canada with talks of making it a 51st state.
“Canada is in a very uncertain place at the moment,” said Wilding.
“We’ve got that domestic political uncertainty following Trudeau’s resignation … but that domestic uncertainty is compounded by this geopolitical or international uncertainty that we have from the incoming Trump administration and these threats of tariffs and any number of other (policies) that are getting thrown around.”
The Canadian dollar traded for 69.74 cents US compared with 69.70 cents US on Monday.
The February crude oil contract was up 69 cents at US$74.25 per barrel and the February natural gas contract was down 22 cents at US$3.45 per mmBTU.
The February gold contract was up US$18.00 at US$2,665.40 an ounceand the March copper contract was up four cents at US$4.20 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Jan. 7, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
