TORONTO — Canada's main stock index ticked lower Thursday, weighed down by losses in the industrial sector, while U.S. markets were mixed.
A better-than-expected U.S. GDP report was helping the market lift a little for most of the day after Wednesday’s sell-off, said Kevin Headland, chief investment strategist at Manulife Investment Management
The U.S. economy accelerated last quarter to an annual pace of 2.8 per cent, picking up from 1.4 per cent growth during the first quarter of the year.
“I think the fear was the data was going to come in a little weaker than expected,” said Headland.
However, Wall Street sputtered to a mixed close Thursday, as big tech stocks continued to give back gains while recent laggards moved higher.
The Russell 2000 index, which is made up of smaller stocks, rose 1.4 per cent Thursday.
In New York, the Dow Jones industrial average was up 81.20 points at 39,935.07. The S&P 500 index was down 27.91 points at 5,399.22, while the Nasdaq composite was down 160.69 points at 17,181.72.
The S&P/TSX composite index closed down 31.54 points at 22,608.03.
Investors continue to look for a sweet spot where inflation is subsiding and the economy is doing relatively well, but the central bank can still cut interest rates, said Headland.
“The market is still happy when we're seeing inflation data slow and economic data come in, in line with expectations ... not too hot, not too cold.”
He expects the economy to slow further as the year progresses, and is a little more dovish on interest-rate cuts than some other market watchers.
“We think we’re going to get probably three rate cuts from the (U.S.) Federal Reserve, so one each meeting starting in September, and then probably three more from the Bank of Canada as well, for a total of five.”
The Bank of Canada on Wednesday cut its key rate for a second time to 4.5 per cent. Meanwhile, the Fed has held firm but is widely expected to announce its first cut in September.
“If next week plays out the way we expect it to play out, it will be a hold with a dovish tilt, kind of setting the market up to expect the first cut in September,” said Headland.
Earnings from IBM helped keep the Dow in the green Thursday, as the company rose 4.3 per cent after beating estimates.
Earnings reports so far have been subject to the same scrutiny as recent quarters, he said. If a company misses even slightly, the market punishes its stock.
The Canadian dollar traded for 72.36 cents US compared with 72.50 cents US on Wednesday.
The September crude oil contract was up 69 cents at US$78.28 per barrel and the September natural gas contract was down nine cents at US$2.07 per mmBTU.
The August gold contract was down US$62.20 at US$2,353.50 an ounce and the September copper contract was up two cents at US$4.13 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published July 25, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
