Ugly February finishes poorly
The Canadian Press - Feb 28, 2023 - Business Buzz

Photo: The Canadian Press

North American stock markets edged down Tuesday to close what has been a rough February for investors.

The S&P/TSX composite index closed down 38.94 points at 20,221.19.

In New York, the Dow Jones industrial average was down 232.39 points at 32,656.70. The S&P 500 index was down 12.09 points at 3,970.15, while the Nasdaq composite was down 11.44 points at 11,455.54.

The Canadian dollar also fell, trading for 73.48 cents US compared with 73.68 cents US on Monday.

Markets settled in the red after a day of choppy, up-and-down trading to close out the month of February. While 2023 started out strong, North American equities have been in retreat for the last several weeks, with last week in particular taking investors on a rough ride. The index fell about 550 points over the course of February.

The month of March, too, appears poised to come in like a lion, with the possibility of more volatility on its way, said Steve Locke with Mackenzie Investments. The optimism early in the year that central banks were poised to signal an end to ongoing interest rate hikes has almost entirely dissipated, he said.

“There’s definitely a lot of volatility that we’ve seen, and it’s come from the resetting of expectations,” Locke said. “With some of the data that’s come through the end of January, early February being a little stronger than expected, we’re seeing now the market has repriced for at least three more hikes (from the U.S. Federal Reserve) over their next few meetings.”

Investors have been worrying for months about the possibility of recession in the wake of a series of rapid interest rate hikes by central banks last year. But in spite of predictions by economists that an economic downturn is likely this year, reports on everything from the job market to consumer spending to inflation itself have come in firmer than expected over the last few weeks.

All of that hotter-than-expected economic data has been bad news for stock markets, as it signals that central bankers—in particular, the influential U.S. Federal Reserve—are not getting control of inflation as quickly as they would like.

It also increases the likelihood of more interest rate hikes, which could in turn tilt the economy into a full-blown recession, taking a bite out of corporate profits and dragging down the equities market.


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