Canada’s main stock index continued to struggle on Tuesday, a day after tumbling back into correction territory, helped by gains in energy shares on the back of higher crude prices.
At 10:44 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 103.68 points, or 0.53%, at 19,638.88, a day after closing 10.6% below the record closing high it notched up in March. The index rose as high as 19,844.29 in early trading
A correction is confirmed when an index closes 10% below its record closing high. The TSX was in correction territory on May 11-12 before rallying again.
“It was such a massive selloff yesterday, that it seems like bears are taking a bit of a break. Maybe we’re getting a bit of bargain hunting out there,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The energy sector was flat despite higher oil prices, as tight global supplies outweighed worries that fuel demand would be hit by a possible recession and fresh COVID-19 curbs in China.
This week’s focus is on the Fed policy decision due on Wednesday, with many expecting a big three-quarter-percentage point rate hike following hot inflation print last week.
“Investors remain on tenterhooks awaiting tomorrow’s Fed interest rate decision, statement and member projections,” Cieszynski added.
On the economic front, domestic factory sales rose 1.7% in April from the prior month on higher sales of petroleum and coal products, as well as motor vehicles, Statistics Canada said.
U.S. stocks extended losses on Tuesday, after a bruising selloff a day earlier pushed the S&P 500 to confirm a bear market, as investors braced for an aggressive interest rate hike from the Federal Reserve this week.
The U.S. central bank is expected to raise interest rates by 75 basis points on Wednesday after last week’s consumer price inflation data came in much hotter than anticipated.
Wall Street’s main indexes have fallen between 16% and 30% this year amid economic uncertainty stoked by supply chain and labor shortages, soaring inflation, the Ukraine war and the impact of aggressive tightening by central banks.
Eight of the 11 major S&P sectors fell, with defensive sectors such as utilities, real estate and healthcare leading the selloff. The energy sector topped the list of gainers, with a 2.1% rise.
Among megacap growth stocks, Amazon fell 0.3%, while Tesla rose 0.4%.
Futures bounced earlier after data showed core producer prices cooled slightly on a year-over-year basis in May.
“Take a look at what the markets look like – interest rates are still a little bit higher, the yield curve is extremely flat, the producer price index came in a little bit better than expected, but not much to really cheer very much about,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.
The Dow Jones Industrial Average was down 77.47 points, or 0.25%, at 30,439.27 and the Nasdaq Composite was down 9.69 points, or 0.09%, at 10,799.54.
The benchmark S&P 500 was down 4.81 points, or 0.13%, at 3,744.82, after closing 20% below its all-time closing high hit on Jan. 3 on Monday.
FedEx Corp leaped 12.4% after raising its quarterly dividend by more than 50%, while Oracle shares firmed 9.2% after the firm posted upbeat quarterly results on demand for its cloud products.
Coinbase Global Inc fell 4% after announcing it would slash 18% of its workforce, or about 1,100 jobs, as part of its efforts to cut costs amid volatile market conditions.
Continental Resources Inc jumped 13.9% after the shale producer received an all-cash buyout proposal from its founder Harold Hamm, valuing the company at $25.41 billion.
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