Markets in Canada and the United States down on Wednesday after two days of optimism

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TORONTO — Markets in Canada and the United States closed slightly lower on Wednesday after two days of optimism at the start of the fourth quarter.

TORONTO — Markets in Canada and the United States closed slightly lower on Wednesday after two days of optimism at the start of the fourth quarter.

Stocks were particularly under pressure at the start of the day, but by market close the indices had rallied somewhat from deeper declines.

The S&P/TSX Composite Index lost 135.90 points to 19,235.09 after gaining nearly 500 points on Tuesday.

In New York, the Dow Jones industrial average was down 42.45 points at 30,273.87. The S&P 500 index fell 7.65 points to 3,783.28, while the Nasdaq composite fell 27.77 points to 11,148.64.

After two days of optimism in the markets at the start of the quarter, the rosy glasses began to come off on Wednesday, said Lyle Stein, president of Forvest Global Wealth Management Inc.

Investors regained confidence after the Bank of England reversed course and started buying bonds again, and Australia’s central bank opted for a softer-than-expected rise, leading investors to wonder if the Canadian and U.S. central banks might also blink, Stein said.

“This market is hypersensitive to interest rates,” he said.

But while a lot could change in the coming weeks, so far, Stein said the Bank of Canada appears on track to continue on its promised path, more or less.

“My feeling is that they will probably be less aggressive than they would have been a month ago,” he said.

Sentiment is growing that the Fed will also stick to its guns, he said.

“Where we end up is going to be interesting.”

With OPEC and production cuts, recent downward pressure on inflation may ease, Stein said, as gas has been a key driver of inflation and the cuts could mean prices at the pump will rise again.

The November crude contract rose US$1.24 to US$87.76 per barrel and the November natural gas contract rose 9 cents to US$6.93 per mmBTU.

The Canadian dollar was trading at 73.31 cents US versus 73.67 cents US on Tuesday.

The December gold contract was down US$9.70 at US$1,720.80 an ounce and the December copper contract was up a penny at US$3.50 a pound.

As the final quarter progresses, Stein will be watching U.S. tech earnings as well as earnings from the energy sector, adding that when the banks report later this year, it could shed some light on what lies ahead. comes in 2023.

“The reality is that we’re entering third quarter earnings season. We’re going into a rising rate environment. And, you know, the two things that hurt stocks the most are falling earnings and rising rates. of interest,” he said.

The current market is very macro-focused, which makes it difficult to predict, Stein said, as the fallout from aggressive rate hikes earlier in the year takes hold.

“We are at the end of a credit cycle, and credit cycle ends are never pretty.”

This report from The Canadian Press was first published on October 5, 2022.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

The Canadian Press


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