TORONTO 鈥� sa国际传媒's main stock index was down more than 200 points Wednesday, with financials, metals and industrials leading the decline, while U.S. stock markets also retreated as debates over the country's debt ceiling remained unresolved.
Officials debating a debt-ceiling deal to avert a financial crisis are 鈥渟till far apart,鈥� House Speaker Kevin McCarthy said, though he expressed optimism that the two sides can reach an agreement before the government runs out of cash to pay its bills.聽
鈥淭he tone is negative,鈥� said Allan Small, senior investment adviser at iA Private Wealth.
While much of the blame for the market鈥檚 downward trend has been placed on the ongoing debt ceiling talks, there are other factors weighing on stocks, said Small, including uncertainty about whether the Federal Reserve will pause its interest rate hikes next month.聽
Meeting minutes from the central bank showed officials were divided earlier this month on whether to pause interest rate hikes at the upcoming meeting in June.聽
Right now, the path of least resistance for the market is down, said Small.
鈥淣ot a huge down day, but enough to get our attention,鈥� he said.聽
The S&P/TSX composite index was down 218.32 points at 19,927.69.
In New York, the Dow Jones industrial average was down 255.59 points at 32,799.92.The S&P 500 index was down 30.34 points at 4,115.24, while the Nasdaq composite was down 76.08 points at 12,484.16.
In sa国际传媒, all eyes were on earnings reports from the big banks, with Bank of Montreal and Scotiabank showing the weight of weakening economic conditions in their results Wednesday.
Both banks reported higher expenses and more money set aside for bad loans, as well as slowing loan growth, leading to a decline in earnings.聽
The fact that bank earnings are slowing isn鈥檛 a surprise given the economic conditions, said Small, though the reports so far have fallen short of analysts鈥� expectations.聽
He doesn鈥檛 expect the trend to reverse any time soon.
鈥淲e could see a few quarters of numbers in decline.鈥澛�
In one 鈥渂right spot,鈥� tech continues to outperform the markets' year to date, said Small, as the sector recoups some of its 2022 losses. He thinks some optimism from investors over artificial intelligence is also helping boost tech stocks.聽
鈥淚t's the NASDAQ and the tech names that are leading the charge,鈥� said Small.聽
But markets overall appear to be in a lull, he said, as uncertainty about interest rates weighs heavy on investors.
Once markets have a better idea of what鈥檚 ahead, Small thinks equities will pull out of their current range and make gains.聽
鈥淚 think we鈥檙e going to stay range bound 鈥� until the Fed stops raising rates, which hopefully will be next month,鈥� he said.聽
The Canadian dollar traded for 73.63 cents UScompared with 74.05 cents US on Tuesday.
The July crude contract was up US$1.43 at US$74.34 per barrel and the July natural gas contract was up eight cents at US$2.57 per mmBTU.
The June gold contract was down US$9.90 at US$1,964.60 an ounce and the July copper contract was down nine cents at US$3.56 a pound.
鈥� With files from The Associated Press
This report by The Canadian Press was first published May 24, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press
