TORONTO — North American stock markets ended a volatile week losing further ground, with reports on the health of employment reinforcing that central banks are likely to continue their significant interest rate hikes.
In Canada, the unemployment rate fell to a record low of 5.2% in April, while 428,000 jobs were added in the United States to beat expectations.
The jobs reports do nothing to quell expectations that the Bank of Canada and the Federal Reserve will raise rates another 50 basis points at their next meetings to fight inflation.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said it used to be that when things crashed, central banks would come up to the rescue.
“Well, now the narrative is kind of reversed when all good means central banks have room to tighten faster,” he said in an interview.
And that worries people because of the impact it would have on the slowing economy and on stock markets.
“We’re probably starting to see more of those who held on, stayed optimistic and everything else is now turning more and more to the towel.”
The S&P/TSX Composite Index closed down 62.89 points at 20,633.28. It staged a rally after hitting an early low of 20,416.38.
It was the sixth straight week of declines, with Wednesday’s positive move more than offset by two days of weakness.
“Even when we have rallies like the ones we had earlier in the week, they haven’t been sustainable. The number of people looking to sell the rally outnumbers the number of people looking to buy the dip at this stage,” Cieszynski said.
In New York, the Dow Jones Industrial Average was down 98.60 points to 32,899.37. The S&P 500 index fell 23.53 points to 4,123.34, while the Nasdaq composite fell 173.03 points to 12,144.66.
“It’s a tough end to a tough week (and) for me, it’s still this whole issue of tightening monetary policy,” he added.
Eight of the TSX’s 11 major sectors were down, led by technology.
The so-called growth sector has plunged 35% so far in 2022 as bond yields and interest rates have risen. On Friday, the 10-year US Treasury hit 3.136%, its highest level since 2018.
Once Canada’s most valuable company, Shopify Inc. has seen its stock price plummet. It was down another 8.2% on Friday after falling 14.3% a day earlier when its latest quarter largely missed earnings expectations.
Health care was down 1.9% and materials fell 0.7%, even though bullion prices were up on the day.
The June gold contract was up US$7.10 at US$1,882.80 an ounce and the July copper contract was down 2.5 cents at US$4.27 per pound.
The energy sector staged a subsequent rally to move into positive territory as crude prices edged higher on the anticipation of the European Union banning imports from Russia.
However, natural gas prices fell more than 8% after hitting their highest level since 2008 following the release of an inventory report by the US Energy Information Administration.
The June crude contract was up US$1.51 at US$109.77 per barrel and the June natural gas contract was down 74 cents at US$8.04 per mmBTU.
Shares of Headwater Exploration Inc and Whitecap Resources Inc gained 3.6% and 2.4% respectively.
The Canadian dollar was trading at 77.63 cents US against 77.99 cents US on Thursday.
Cieszynski said May is generally not a good month for stock markets and the upcoming U.S. midterm elections will also contribute to volatility.
“So there are all kinds of things going on, but it’s just a tough time for the markets right now.”
This report from The Canadian Press was first published on May 6, 2022.
Companies in this story: (TSX:HWX, TSX:WCP, TSX:SHOP, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press