Index takes notable tumble
The Canadian Press - May 24, 2023 - Business Buzz

Photo: The Canadian Press

TORONTO — Canada’s main stock index was down more than 200 points Wednesday, with financials, metals and industrials leading the decline, while U.S. stock markets also retreated as debates over the country’s debt ceiling remained unresolved.

Officials debating a debt-ceiling deal to avert a financial crisis are “still far apart,” House Speaker Kevin McCarthy said, though he expressed optimism that the two sides can reach an agreement before the government runs out of cash to pay its bills.

“The tone is negative,” said Allan Small, senior investment adviser at iA Private Wealth.

While much of the blame for the market’s downward trend has been placed on the ongoing debt ceiling talks, there are other factors weighing on stocks, Small said, including uncertainty about whether the Federal Reserve will pause its interest rate hikes next month.

Meeting minutes from the central bank showed officials were divided earlier this month on whether to pause interest rate hikes at the upcoming meeting in June.

Right now, the path of least resistance for the market is down, Small said.

“Not a huge down day, but enough to get our attention,” he said.

The S&P/TSX composite index was down 218.32 points at 19,927.69.

In New York, the Dow Jones industrial average was down 255.59 points at 32,799.92.The S&P 500 index was down 30.34 points at 4,115.24, while the Nasdaq composite was down 76.08 points at 12,484.16.

In Canada, all eyes were on earnings reports from the big banks, with Bank of Montreal and Scotiabank showing the weight of weakening economic conditions in their results Wednesday.

Both banks reported higher expenses and more money set aside for bad loans, as well as slowing loan growth, leading to a decline in earnings.

The fact that bank earnings are slowing isn’t a surprise given the economic conditions, said Small, though the reports so far have fallen short of analysts’ expectations. He doesn’t expect the trend to reverse any time soon.

“We could see a few quarters of numbers in decline,” he said.

The Canadian dollar traded for 73.63 cents US compared with 74.05 cents US on Tuesday.

The July crude contract was up US$1.43 at US$74.34 per barrel, and the July natural gas contract was up eight cents at US$2.57 per mmBTU.

The June gold contract was down US$9.90 at US$1,964.60 an ounce, and the July copper contract was down nine cents at US$3.56 a pound.

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