Canada’s main stock gave back some of its November gains on Monday as technology shares lost ground and investors turned their attention to the start of bank earnings season.
The S&P/TSX composite index ended down 281.00 points, or 0.9 per cent at 31,101.78, after posting a record closing high on Friday. In November, the index advanced 3.7 per cent as rising expectations that the Federal Reserve would cut interest rates further boosted base and precious metal prices.
U.S. stocks also lost ground on Monday as long-term borrowing costs climbed.
“Investors return from the U.S. holiday weekend and enter December in a cautious mood,” Colin Cieszynski, chief market strategist at SIA Wealth Management, said in a note.
Thousands of Shopify users encountered issues related to logging in to the online shopping platform, impacting customers and several small businesses on Cyber Monday.
Shopify’s shares lost 6.3 per cent, while the technology sector ended 4.1 per cent lower.
Financials were also a drag, losing 1 per cent. Analysts are expecting Canadian banks to report strong fourth-quarter results this week, benefiting from business at their investment banking and wealth management segments while credit continues to stabilize, although lofty valuations will be tested.
“In addition to the results, investors may look for commentary on the state of the Canadian economy, the direction of loan loss provisions, and potential dividend increases,” Cieszynski said.
Canada’s manufacturing sector contracted at a steeper pace in November as trade uncertainty continued to hold back output and new orders.
The materials sector, which includes metal mining shares, was among the categories that ended higher. It was up 0.1 per cent, with Barrick Mining adding 1.4 per cent.
The company said it was exploring an initial public offering of a subsidiary that would hold its North American gold assets as bullion prices this year have rallied to record highs.
U.S. stocks closed modestly lower on Monday, weighed down by a jump in Treasury yields and economic data that showed tariffs remained a drag on the manufacturing sector, as investors looked toward the Federal Reserve’s policy announcement next week.
The Institute for Supply Management’s survey showed U.S. manufacturing contracted for a ninth straight month in November, as factories dealt with slumping orders and higher prices as the effect from tariffs lingered.
Markets have largely priced in a rate cut from the Fed at the conclusion of its two-day policy meeting on December 10. They are pricing in an 85.4-per-cent chance of a 25 basis-point cut, according to CME’s FedWatch Tool.
“The market actually is still obviously earnings-driven, we went through earnings season, but now it’s the Fed,” said Joe Saluzzi, partner, co-founder and head of Equity Market Structure Research and co-head of Equity Trading at Themis Trading in Chatham, New Jersey.
“I see no reason why the uptrend doesn’t continue, at least, not as quickly, but maybe more of a grind up to the end of the year.”
The Dow Jones Industrial Average fell 427.09 points, or 0.90 per cent, to 47,289.33, the S&P 500 lost 36.46 points, or 0.53 per cent, to 6,812.63 and the Nasdaq Composite lost 89.76 points, or 0.38 per cent, to 23,275.92.
While many policymakers have struck a cautious tone, dovish signals from a few key voting members in recent weeks, along with reports that White House economic adviser Kevin Hassett is a leading contender to succeed Fed Chair Jerome Powell, have heightened expectations for further monetary easing in the months ahead.
Powell was scheduled to speak after the market close but was unlikely to address monetary policy due to the proximity to the central bank’s policy meeting.
“I guess they’ll look for hints of anything that he could say, but it looks like it’s a done deal,” said Saluzzi.
Investors are also waiting for a delayed September report on the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, due on Friday.
Despite expectations for a cut, U.S. Treasury yields were higher on Monday following weakness in Japanese and European government bonds in the wake of comments from Bank of Japan Governor Kazuo Ueda, who signaled that conditions were aligning for a possible rate hike. Bond yields move inversely to prices.
The rise in yields weighed on S&P 500 sectors such as real estate and utilities, which are seen by many investors as bond proxies.
Coinbase, which ended down 4.8 per cent, and U.S.-listed shares of Bitfarms, off 5.7 per cent, were among the crypto stocks that showed significant weakness, as bitcoin stumbled nearly 6 per cent and at one point dropped below US$85,000.
The crypto market has lost more than US$1-trillion in value since hitting a record of around US$4.3-trillion, according to CoinGecko.
Strategy, the world’s largest holder of the cryptocurrency, ended 3.3 per cent lower after tumbling as much as 12 per cent. It cut its earnings forecast for 2025, citing a weak run in bitcoin.
Big-box retailers were in focus on Cyber Monday, with shoppers expected to spend US$14.2-billion online, according to Adobe Analytics. Shares of Walmart and Target advanced 0.9 per cent and 0.8 per cent, respectively.
The S&P 500 retail index edged up 0.2 per cent.
Synopsys shares closed 4.9 per cent higher after AI chip leader Nvidia said it had invested US$2-billion in the semiconductor design software provider.
Declining issues outnumbered advancers by a 1.86-to-1 ratio on the NYSE and by a 2.33-to-1 ratio on the Nasdaq.
The S&P 500 posted 17 new 52-week highs and one new low, while the Nasdaq Composite recorded 76 new highs and 78 new lows.
Volume on U.S. exchanges was 15.64 billion shares, compared with the 18.64 billion average for the full session over the last 20 trading days.
Reuters