S&P/TSX composite down Wednesday, U.S. stock markets drift higher

TORONTO – Canada’s main stock index retreated from its all-time high on Wednesday, weighed down by telecom, industrial and utilities stocks, while U.S. markets drifted higher.
Markets are in a “holding pattern,” with the path of least resistance currently pointing up, said Allan Small, senior investment adviser at iA Private Wealth.
“I think the markets right now are looking for direction, looking for the next catalyst,” he said.
The S&P/TSX composite index closed down 32.44 points at 24,001.55.
In New York, the Dow Jones industrial average was up 39.55 points at 42,196.52. The S&P 500 index was up 0.79 points at 5,709.54, while the Nasdaq composite was up 14.76 points at 17,925.12.
The U.S. Federal Reserve is largely expected to cut its key interest rate as projected this year, said Small, by a quarter of a percentage point in November and December.
“So you’re probably looking at one full point by the end of the year, unless we get something very surprising in the employment data on Friday, or maybe in the next employment data after that,” he said.
But barring a surprise in the major U.S. jobs report this Friday, Small said a catalyst is unlikely to come before earnings season.
A smaller report on private-sector employment Wednesday said employers accelerated hiring in September, a potentially encouraging sign for market watchers concerned about softness in the job market.
Markets in both Canada and the U.S. are in a bit of uncharted territory, noted Small: both countries’ central banks are cutting interest rates despite the markets being at all-time highs.
“Usually you have central banks cutting rates to stimulate the economy, because the economy is sputtering, the stock market is at low points,” he said.
Rate cuts are going to help the already-strong market, said Small, making companies’ valuations “a lot more justifiable.” But the fact markets are already at all-time highs means the cuts won’t necessarily prompt big movements, he said.
In the U.S., much of the strength this year so far has been on the backs of major tech companies making big investments in artificial intelligence. But over the past quarter that’s shifted, said Small, with strength on Wall St. broadening to other sectors like retail, finance and pharma.
In Canada, the new highs are largely because of gold and bank stocks, said Small, both of which will benefit from upcoming rate cuts.
Meanwhile, oil prices continued rising Wednesday, a day after missile attacks by Iran on Israel prompted concerns about supply. But oil is still relatively low, Small said.
The Canadian dollar traded for 74.12 cents US compared with 74.05 cents US on Tuesday.
The November crude oil contract was up 27 cents at US$70.10 per barrel and the November natural gas contract was up a penny at US$2.89 per mmBTU.
The December gold contract was down US$20.60 at US$2,669.70 an ounce and the December copper contract was up six cents at US$4.65 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Oct. 2, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)