TORONTO – A late recovery prevented North American stock markets from getting off to the same dismal start in May as they did in April.
The day began as last week’s selloff in global stock markets extended into the new month “with weaker-than-expected manufacturing data in the United States, adding to fears of an economic slowdown and dampening risk appetite,” said Candice Bangsund, portfolio manager for Fiera Capital. .
Monday’s data showed the ISM gauge of U.S. manufacturing activity unexpectedly dropped to the lowest level since 2020, she said.
Benchmark 10-year U.S. Treasuries rose above 3% for the first time since 2018, anticipating the Federal Reserve will raise interest rates by 50 basis points on Wednesday to combat soaring inflation. They ended the day at 2.979%.
The S&P/TSX Composite Index closed 69.78 points at 20,692.22 after losing as much as 305 points.
After being down for most of the day, the Dow Jones Industrial Average gained 84.29 points to 33,061.50. The S&P 500 index rose 23.45 points to 4,155.38, while the Nasdaq composite rose 201.38 points to 12,536.02.
Real estate lagged the most on the Toronto Stock Exchange, falling 3.9% as several large real estate income trusts suffered large stock losses.
Utilities and telecommunications were also weaker while commodities fell.
Energy rebounded from a big early loss to edge lower even as crude oil prices reversed course to end the day up slightly. Refined product prices have soared, helping to counter threats to China’s demand outlook stemming from COVID-induced lockdowns, Bangsund wrote in an email.
“The strength in refined products is attributed to depleted stocks around the world as countries cut Russian fuel,” she said.
The weak start to the day came as China’s purchasing managers’ indices for April showed a sharp contraction in economic activity as it struggles to contain the COVID outbreak.
The June crude contract rose 48 cents to US$105.17 per barrel and the June natural gas contract rose 23.1 cents to nearly US$7.48 per mmBTU.
The Materials sector fell 0.6% as the price of gold fell as the U.S. dollar hit a five-year high and Treasury yields rose, dampening appetite for non-interest bearing bullion.
The June gold contract was down US$48.10 at US$1,863.60 an ounce and the July copper contract was down 14.1 cents at US$4.27 an ounce. book.
Sandstorm Gold Ltd. was the weakest in the materials sector after announcing the signing of a pair of acquisitions worth a total of US$1.1 billion.
The tech rebounded to lift the Nasdaq and S&P 500 into positive territory after both hitting their 2022 lows earlier in the day.
The Canadian technology sector rose 1.7%, with Shopify Inc. gaining 6.1%.
Health care also rose 1.4%, Canopy Growth Corp. and Tilray Inc. rising 5.3% and 5.2% respectively.
The Canadian dollar fell to its lowest level of the year, trading at 77.55 cents US, from 78.17 cents US on Friday.
This report from The Canadian Press was first published on May 2, 2022.
Companies in this story: (TSX:SSL, TSX:WEED, TSX:TLRY, TSX:GSPTSE, TSX:CADUSD=X)
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