Photo: The Canadian Press

TORONTO — Canada’s main stock index was down almost 1.3% Tuesday with broad-based losses led by technology, health care and financials, while U.S. stock markets slid more than 2%.

The S&P/TSX composite index was down 262.60 points at 20,252.64.

In New York, the Dow Jones industrial average was down 697.10 points at 33,129.59. The S&P 500 index was down 81.75 points at 3,997.34, while the Nasdaq composite was down 294.97 points at 11,492.30.

The early rally of 2023 that was driven by decelerating inflation is now encountering choppier waters, said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management.

Data released Tuesday showed that annual inflation in January was 5.9% compared with 6.3% in December.

Though Canadian CPI data released Tuesday revealed the inflation rate was actually lower than expected—in theory, good news—markets seem to be grappling with questions about what that means for the economy, said Burkett.

“That battle appears to have been fought and won,” he said. “So the question is, what happens next?”

Burkett noted that riskier assets, in particular tech, were dragging markets down today, which is likely why U.S. markets were down by larger percentages than the TSX, which isn’t as heavily weighted towards tech.

There are two main paths forward that the market is grappling with, Burkett said.

“One of those paths looks pretty nasty. The other one looks quite comfortable, but it’s maybe not realistic,” he said.

“I think that the markets are kind of taking stock of … what the coming year will bring.”

The Canadian dollar traded for 73.99 cents US compared with 74.15 cents US on Friday.