TORONTO — Canada's main stock index lost more than 50 points Wednesday despite strength in energy stocks, while U.S. stock markets also fell.
The S&P/TSX composite index closed down 53.56 points at 20,818.58.
In New York, the Dow Jones industrial average was down 284.85 points at 37,430.19. The S&P 500 index was down 38.02 points at 4,704.81, while the Nasdaq composite was down 173.73 points at 14,592.21.
Some of last year’s biggest gainers in the U.S. helped the Nasdaq lead markets lower on Wednesday, with Tesla down four per cent and Nvidia down 1.2 per cent.
“If you look specifically at tech, it had a really, really strong run in 2023. And it would make some sense for investors to take profits in 2024 ... given the strong returns that they had last year,” said Anish Chopra, managing director with Portfolio Management Corp.
The U.S. Federal Reserve released the minutes from its December meeting, at which the central bank projected its overnight rate would fall by 0.75 percentage points in 2024, on Wednesday.
The minutes showed most officials believe rate cuts will likely be warranted this year, but that uncertainty is also elevated.
The message is that the central bank isn’t yet ready to cut rates and remains data dependent, but still expects rates to have declined by the end of the year, said Chopra.
The market may be too optimistic about how early those cuts could come, though, he said.
The U.S. labour market had nearly 8.8 million job openings at the end of November, according to a report Wednesday, the lowest number since 2021, indicating employers aren't in the hiring mood.
The report shows the labour market south of the border continues to normalize, said Chopra.
“The factors are lining up for rate cuts later in the year,” he said.
The Bank of Canada is in a similar data-dependent phase, said Chopra, despite the Canadian economy being weaker under the weight of interest rate hikes.
“The U.S. economy seems to have weathered the rate cycle better in terms of GDP growth,” he said.
January will see fourth-quarter earnings start rolling in, which will help paint a fuller picture for investors of how 2023 went for companies, Chopra said.
Those reports will also offer fresh outlooks on companies’ forecasts for 2024, he added.
The price of oil rose Wednesday amid continued turmoil in the Middle East, which Chopra said will spell ongoing volatility for the commodity.
The TSX energy index was up 3.4 per cent Wednesday, as the February crude oil contract was up US$2.32 at US$72.70 per barrel.
The Canadian dollar traded for 74.87 cents US compared with 75.10 cents US on Tuesday.
The February natural gas contract was up 10 cents at US$2.67 per mmBTU.
The February gold contract was down US$30.60 at US$2,042.80 an ounceand the March copper contract was down two cents at US$3.86 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Jan. 3, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
