Canada’s main stock index finished higher on Wednesday as mining stocks rallied and investors eagerly awaited quarterly earnings reports, but the index’s gains were contained after the federal budget proposed increase a tax on investment profits. US indices closed lower after a turbulent day of trading.
The S&P/TSX Composite Index ended up 13.18 points, or 0.1%, at 21,656.05, after five straight days of decline.
“There is some dip buying at the margins,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth. “Mining stocks, we saw the rebound after being sold off [Tuesday]. The big question is whether first-quarter earnings will be strong enough to provide the necessary impetus for markets to rise.
The materials group, which includes metal mining and fertilizer companies, rose 0.8% on higher copper prices.
Technology was another bright spot, up 0.6%, and heavily weighted financials added 0.1%. It was helped by a 6.3% gain for goeasy Ltd shares after CIBC raised its price target on the lender to $200 from $175.
Canada’s budget proposed Tuesday to increase the share of capital gains that is taxable for wealthy individuals as well as businesses and trusts. The measure would come into force on June 25.
“There could be sales of stocks where people make big gains before the tax rate increases. This could impact the market,” said Greg Taylor, portfolio manager at Purpose Investments.
Among the declining sectors are industries. It lost 0.7% and energy fell 0.3% while oil stabilized down 3.3% at $82.69 a barrel.
On Wall Street, investors have been weighing the Federal Reserve’s interest rate direction and a string of weak earnings at the start of the financial reporting season.
Travelers fell 7.41% and was among the biggest drags on the S&P 500 and the largest Dow Industrials after the insurance giant missed Wall Street’s profit expectations of the first trimester.
Prologis, the warehouse-focused real estate investment company, also weighed on the benchmark S&P after quarterly results, down 7.19%, and Abbott Laboratories, which fell 3.03% after exceeded quarterly estimates but disappointed on its annual forecasts.
After a rally in the final two months of 2023 that extended into the first quarter, U.S. stocks struggled, with the S&P 500 recording its fourth consecutive session of decline. The index is poised for its third straight weekly loss as investors lowered their expectations for the timing and size of the Fed’s rate cuts.
On Tuesday, U.S. central bank officials, including Fed Chairman Jerome Powell, backed away from providing guidance on when rates might be cut, instead saying monetary policy needed to be tight for longer.
“Markets are facing several issues: inflation is higher than expected, rate cut expectations are waning and we have seen rising geopolitical tensions, particularly in the Middle East,” said Anthony Saglimbene, strategist chief of markets. at Ameriprise Financial in Troy, Michigan.
“It’s just an excuse for traders to take a step back and for markets to catch their breath after five months of really strong gains.”
The Dow Jones Industrial Average fell 45.66 points, or 0.12%, to 37,753.31, the S&P 500 lost 29.20 points, or 0.58%, to 5,022.21 and the Nasdaq Composite fell 181.88 points, or 1.15%, to 15,683.37.
The S&P 500’s four-session sell-off is the longest in just over four months, matching a four-day decline streak that ended on January 4.
The Fed’s Beige Book survey of economic activity showed a slight expansion between late February and early April and businesses feared that progress in reducing inflation might stall.
After the market began largely pricing in a June Fed cut earlier this year, expectations for a cut of at least 25 basis points narrowed to 16.8%, and expectations for a cut by 46% in July, CME’s FedWatch tool showed.
Stocks pared losses as U.S. Treasury yields fell further from the previous day’s multi-month highs following a strong auction of 20-year bonds, with the 10-year note having reaches approximately 4.59%.
Among the gainers, United Airlines jumped 17.45% after forecasting higher-than-expected current quarter numbers, helping to lift the NYSE Arca Airline Index 3.82%. its largest daily percentage increase since February 6.
JB Hunt Transport Services fell 8.12% to become the S&P 500’s worst performer after the trucking company missed Wall Street estimates for its first-quarter results.
US Bancorp fell 3.61% after the lender cut its full-year interest income forecast and reported a 22% drop in first-quarter profit.
On the NYSE, declining issues outnumbered advancing stocks by a ratio of 1.1 to 1 and 1.54 to 1 on the Nasdaq. The NYSE recorded 21 new highs and 103 new lows. On the Nasdaq, there were 27 new highs and 240 new lows. Volume on U.S. exchanges totaled 10.8 billion shares, compared to an average of 11.05 billion for the entire session over the past 20 trading days.
Reuters, Globe staff
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