TORONTO — Strength in financials and utilities helped Canada's main stock index stay afloat Tuesday as U.S. markets were mixed, weighed down by losses in the tech sector.
The S&P/TSX composite index was up 45.10 points at 22,824.67.
In New York, the Dow Jones industrial average was up 203.40 points at 40,743.33. The S&P 500 index was down 27.10 points at 5,436.44, while the Nasdaq composite was down 222.79 points at 17,147.42.
Tech stocks dragged the S&P 500 and Nasdaq down, said Michael Greenberg, head of Americas portfolio management at Franklin Templeton Investment Solutions.
“You're definitely seeing that continuation of some of that churn we've seen the last few weeks,” Greenberg said.
“With major tech names narrowly leading the market for months on end, you’re seeing quite a violent rotation around those parts of the market,” he said.
Greenberg called it a “healthy correction” after expectations for the tech sector got over-exuberant because of artificial intelligence.
“Earnings expectations had risen quite a lot,” he added.
As earnings season rolls forward, financial results have been good — but not always meeting that high bar, he said, such as Tesla and Alphabet, which underwhelmed last week.
Investors on Tuesday were awaiting earnings from Microsoft, set to report after the bell. Shares in Microsoft were down almost one per cent.
The company is one of the so-called Magnificent Seven, which have been driving index records this year but also seem to be running out of momentum this month.
The rotation into other sectors also reflects growing confidence that the U.S. economy will achieve a soft landing as inflation is tamped down and interest rate cuts look to be around the corner, said Greenberg.
“It’s probably not a bad environment for some of these companies that have been ... left behind,” he said.
“I think it would be fair to see a bit more of a broadening out of that rally.”
A pair of U.S. reports Tuesday showed employers were advertising slightly more job openings than economists expected at the end of June, while U.S. consumer confidence also looks to be improving more than expected.
The U.S. Federal Reserve is expected to hold its key rate steady on Wednesday, but is widely seen as poised to cut in September.
“I think they’re going to leave the door open to cut in September, to begin that normalization process, but of course give themselves an out should the data go the other way,” said Greenberg.
“They’re going to want to maintain some of that flexibility.”
The Canadian dollar traded for 72.20 cents US compared with 72.19 cents US on Monday.
The September crude oil contract was down US$1.08 at US$74.73 per barrel and the September natural gas contract was up seven cents at US$2.13 per mmBTU.
The December gold contract was up US$26.40 at US$2,451.90 an ounce and the September copper contract was unchanged at US$4.08 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published July 30, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
