TORONTO — Canada's main stock index closed out Friday down just a handful of points after falling more than 400 points a day earlier,while U.S. stock markets also moved lower.
It was Wall Street’s worst week in six months, but it closed with more of a whimper than a bang as Treasury yields softened slightly and investors continued to digest the U.S. central bank’s new projections for the economy and for interest rates.
In New York, the Dow Jones industrial average was down 106.58 points at 33,963.84.The S&P 500 index was down 9.94 points at 4,320.06, while the Nasdaq composite was down 12.18 points at 13,211.81.
In Canada, the S&P/TSX composite index closed down 11.65 points at 19,779.97.
The U.S. Federal Reserve held its key interest rate Wednesday but signalled rates could stay higher for longer amid an unexpectedly resilient economy. Markets were choppy for most of the week, declining in particular after the Fed’s announcement.
The big question now isn’t how high rates will go, but for how long they will stay high, said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd.
Many investors, and the Fed itself, thought the economy would have weakened more by now, she said. But it’s important to remember that the economy works with a lag, and that data is showing signs of weakening in areas like consumer spending and debt.
“Seeing this slide or this movement suggests that this year’s market rally (was) maybe based on unrealistic expectations,” she said, referring to the tech-fuelled gains that dominated the first half of 2023.
On Friday, Statistics Canada reported that retail sales rose 0.3 per cent in July, but projected a decline in August based on early estimates.
Meanwhile in the U.S., an S&P Global report showed flagging momentum in services industries.
As investors look ahead to the “home stretch” of the year, Gardner expects volatility and some rotation toward safer investments.
“I think some investors are maybe rethinking buying the growth stocks, if interest rates are going to remain high,” she said.
The Canadian dollar traded for 74.20 cents US, according to XE.com, compared with 74.15 cents US on Thursday.
The November crude contract was up 40 cents at US$90.03 per barrel and the November natural gas contract was up four cents at US$2.88 per mmBTU.
The December gold contract was up US$6.00 at US$1,945.60 an ounceand the December copper contract was unchanged at US$3.70 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 22, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press