TORONTO — Canada's main stock index moved lower on Tuesday, weighed down by energy stocks as oil prices retreated, while U.S. markets inched higher and the Dow added a few points to Monday's record high.
U.S. investors are waiting in anticipation of earnings Wednesday from semiconductor giant Nvidia, one of the main drivers of market gains this year amid optimism over artificial intelligence.
“It's probably one of the most important earnings calls that we have had this year,” said Ilana Schonwetter, investment advisor and portfolio manager at BlueShore Financial.
“They have a lot going for them, but in order to justify their valuations, they need to be able to show that they can support the earnings growth,” she said.
In New York, the Dow Jones industrial average was up 9.98 points at 41,250.50. The S&P 500 index was up 8.96 points at 5,625.80, while the Nasdaq composite was up 29.05 points at 17,754.82.
Whether Nvidia’s earnings surprise to the upside or the downside, its weight on the S&P 500 and influence on other big tech names means big moves are likely, said Schonwetter.
“We could see a very significant move in the S&P and Nasdaq tomorrow, depending on how this earnings call goes.”
However, with the Dow hovering near a fresh record high, Schonwetter noted that markets have been broadening recently beyond the small handful of tech names that have led this year’s rally.
“That definitely signals a much healthier, more stable market than what we saw in the earlier part of the year,” she said.
A new report showed consumer confidence in the U.S. was up in August, a better result than economists expected.
In Canada, the S&P/TSX composite index closed down 89.01 points at 23,259.96.
Markets were weighed down by energy stocks as the price of oil erased a big chunk of Monday’s 3.5-per-cent jump. The energy index on the TSX was down almost two per cent.
The spotlight this week in Canada is on earnings from the major banks. Last week, TD kicked things off with a charge related to investigations into its anti-money-laundering program taking a big bite out of its earnings.
On Tuesday, Bank of Montreal and Scotiabank saw higher loan loss provisions weigh on their earnings reports.
So far this quarter has been “probably the worst financial reporting that we have seen from the Canadian banks for quite some time, not necessarily in actual losses, but in preparing for much more tight financial conditions, may it be through fines (or) through loss provisions,” said Schonwetter.
But with higher interest rates squeezing consumers, it’s not a surprise that the banks are bearing some of the signs, she said.
“The Canadian consumer has struggled through these very, very high interest rates that really came out much quicker and much more aggressively than anybody had expected,” she said.
Relief will come as the Bank of Canada continues to cut interest rates, but likely won’t really show up for consumers until early next year after several more cuts, she said.
The Canadian dollar traded for 74.29 cents US compared with 74.18 cents US on Monday.
The October crude oil contract was down US$1.89 at US$75.53 per barrel and the October natural gas contract was down four cents at US$2.09 per mmBTU.
The December gold contract was down US$2.30 at US$2,552.90 an ounce and the December copper contract was up two cents at US$4.30 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Aug. 27, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
