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The S&P/TSX Composite Index, Dow Jones Industrial Average and S&P 500 closed lower on Wednesday, retreating from recent record highs fueled by China’s sweeping stimulus package, as investors awaited further economic indicators and signals on upcoming interest rate cuts.
The major North American indexes were set for monthly gains after the Federal Reserve’s rate cut on Sept. 18 boosted hopes of a soft landing. However, a weak U.S. consumer sentiment report on Tuesday raised concerns about the labour market health.
“What happened in commodities and basic materials, etc., was quite a reaction to … ‘hey, what if China can get growing again?’ And that kind of feeds into other areas, (and) it helps other economies,” said Tom Martin, senior portfolio manager at Globalt in Atlanta.
The S&P 500 and the tech-heavy Nasdaq have risen about 20% so far this year, driven by expectations of rate cuts and optimism about artificial intelligence. However, the S&P 500 is trading at valuations significantly above long-term averages.
“Valuations are fairly high right now, sentiment is fairly high,” Martin said, noting that caution is creeping in. “It’s hard to find bargains out there, because everything that has gotten hit, a lot of it has come back, and the market has broadened out.”
The S&P/TSX composite index ended down 46.34 points, or 0.2%, at 23,905.88, after four straight days of gains. On Tuesday, the TSX posted a record closing high as China’s stimulus package boosted investor sentiment globally.
The TSX energy sector fell 1.8% as the price of oil settled 2.6% lower at US$69.69 a barrel on easing worries over supply disruptions in Libya.
Consumer discretionary fell 1.2%, weighed by a decline of 5.5% for the shares of Magna International after Morgan Stanley downgraded the stock to “equal-weight” from “overweight”. Industrials also lost ground, falling 0.6%.
Lightspeed Commerce Inc was a bright spot. Shares of the payments software maker jumped 13.3% after reports that the company is working with a financial adviser to explore options, including a potential sale.
The Dow Jones Industrial Average fell 293.47 points, or 0.70%, to 41,914.75. The S&P 500 lost 10.67 points, or 0.19%, at 5,722.26 and the Nasdaq Composite gained 7.68 points, or 0.04%, at 18,082.21.
The blue-chip Dow slipped after hitting record highs, pressured by a decline in Amgen, which reported mixed data on two drugs, sparking concerns over heightened competition.
Nine out of the 11 S&P 500 sectors fell, led by energy stocks which fell 1.9%. Tech stocks bucked the trend with a 0.5% rise, supported by Nvidia’s 2.14% gain.
Apple shares slipped 0.52% as sales of foreign-branded smartphones, including iPhones, in China fell in August on an annual basis, data from a government-affiliated research firm showed.
Citigroup, Bank of America and JPMorgan & Chase weighed on the broader bank index, which dropped 0.93%.
KB Home slipped 5.35% after posting a downbeat third-quarter profit.
Hewlett Packard Enterprise topped the S&P 500 with a 5.14% gain after a Barclays’ rating upgrade.
Shares of Ford and General Motors fell over 4% after Morgan Stanley lowered its recommendations on the automakers.
Declining issues outnumbered advancers by a 2.4-to-1 ratio on the NYSE. There were 387 new highs and 56 new lows on the NYSE. The S&P 500 posted 36 new 52-week highs and two new lows while the Nasdaq Composite recorded 70 new highs and 110 new lows. Volume on U.S. exchanges was 10.42 billion shares, compared with the 11.69 billion average for the full session over the last 20 trading days.
Reuters, Globe staff