TORONTO — Losses in industrial and base metal stocks dragged Canada's main stock index lower Wednesday, while markets in the U.S. slid.
Stocks were under pressure amid a “sizeable selloff” led by the tech sector, said Tamsin Wilding, principal and portfolio manager for fixed income at Leith Wheeler Investment Counsel Ltd.
U.S. stock indexes suffered their worst day since 2022, with major tech stocks dragging the market lower. Tesla and Alphabet both reported earnings after the bell Tuesday, and while Alphabet’s profit and revenue were better than expected, Tesla’s earnings fell short of forecasts.
Alphabet shares fell five per cent, while Tesla's stock fell more than 12 per cent. Other major tech companies also fell, with Microsoft down 3.6 per cent, Nvidia down 6.8 per cent and Apple down almost three per cent.
The Nasdaq composite led losses among the major U.S. indexes, down 654.94 points, or 3.6 per cent, at 17,342.41.
The Dow Jones industrial average was down 504.22 points, or 1.3 per cent, at 39,853.87. The S&P 500 index was down 128.61 points, or 2.3 per cent, at 5,427.13.
Though markets this year have been sensitive to the macro picture, particularly interest rates, Wilding said Wednesday’s slide is isolated to concerns over tech earnings.
In Canada, the S&P/TSX composite index closed down 174.18 points at 22,639.57.
The Bank of Canada announced its second interest rate cut of the year so far, a widely anticipated decision, bringing its rate down to 4.5 per cent.
At a press conference, governor Tiff Macklem said with inflation nearing the central bank’s target, it needs to consider the risks associated with keeping interest rates high.
“That need for growth to pick up was something that was part of our decision to cut the policy interest rate today,” he said.
The announcement marked a directional change for the central bank, said Wilding.
“The key thing from today was the pronounced shift by the Bank of Canada towards acknowledging downside risks to growth.”
The message was dovish for those hoping more rate cuts are on the way, she said.
“I think they were pretty clear that their intention is still to ease if the data allows.”
The market is pricing in two more cuts in 2024, said Wilding, a bet validated by the central bank’s comments.
At the press conference, Macklem dismissed concerns about the interest rate policy of the U.S. Federal Reserve — which has yet to cut — diverging too much from Canada’s.
Expectations are high for a Fed cut in September.
The Canadian dollar traded for 72.50 cents US compared with 72.63 cents US on Tuesday.
The September crude oil contract was up 63 cents at US$77.59 per barrel and the September natural gas contract was down six cents at US$2.16 per mmBTU.
The August gold contract was up US$8.40 at US$2,415.70 an ounce and the September copper contract was down five cents at US$4.11 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published July 24, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
