The TSX and S&P 500 indexes ended lower on Tuesday as investors awaited the result of the Federal Reserve’s two-day policy meeting. The energy sector led declines on the TSX, which closed in the red for the first time in eight sessions amid oil prices falling for a third day.
The S&P/TSX Composite Index closed down 80.74 points, or 0.43%, at 18,874.01. The energy sector lost 3.20%. Germany, France and Italy said they would suspend use of the Oxford/AstraZeneca COVID-19 vaccine after reports about possible serious side effects, threatening the recovery of fuel demand.
Brent crude fell 49 cents to settle at $68.39 a barrel, while U.S. crude dropped 59 cents to settle at $64.80 a barrel.
The World Health Organization said there was no established link of the side effects to the vaccine. Europe’s medicines watchdog said the benefits of the AstraZeneca vaccine outweigh its risks. And in Canada, the National Advisory Committee on Immunization says there is now enough “real-world evidence” to show the Oxford-AstraZeneca COVID-19 vaccine is both safe and effective for seniors.
Investors are worried the slow pace of vaccinations in the European Union could hurt economic recovery and fuel demand.
“For oil demand to fully recover, a successful and rapid inoculation of the global population needs to take place,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. “Before the recent setback, there was positivity that the campaigns under way were on the right track.”
In Toronto, Rogers Communications rose 5.65%, one day after its blockbuster takeover offer for Shaw Communications, which closed up a further 2.51% at $34.70. Some analysts Tuesday increased their price targets on the two telecoms and expressed a fair degree of confidence that the deal will be approved by regulators.
The U.S. stock market lacked direction for much of the day after the S&P 500 and Dow Jones Industrial Average closed at record highs on Monday. Wall Street has recently benefited from optimism about a $1.9 trillion fiscal stimulus package and ongoing vaccination drives that have bolstered views that the economy is on a path to recovery.
At the same time, fears about an overheating economy and a recent increase in interest rates have increased scrutiny on the Fed’s two-day meeting, where policymakers are likely to raise economic forecasts and repeat their pledge to remain accommodative for the foreseeable future.
The Nasdaq ended higher. Apple Inc rose 1.3% after Evercore ISI hiked its price target on the iPhone maker’s shares to the highest among analysts covering the company, according to Refinitiv data.
Wall Street’s fear gauge hit a five-week low at 19.68 points. A midafternoon rise in the 10-year Treasury yield to 1.62% nipped some enthusiasm for high-growth stocks. The benchmark U.S. 10-year Treasury hit a 13-month high last week.
Investors have slightly increased their cash allocation, deeming that inflation and “taper tantrums” could topple the record rally in financial markets, BofA’s March fund manager survey showed on Tuesday.
“This Fed meeting is one of the most important ones for the market in a long time. It is the first we have had after the recent inflation rate rise and concerns about inflation,” said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.
Data showed retail sales dropped more than expected in February due to bitterly cold weather across the country. Another report indicated winter storms in Texas led to a plunge in U.S. factory output last month.
The Dow Jones Industrial Average fell 0.39% to end at 32,825.95 points, while the S&P 500 lost 0.16% to 3,962.71.
The Nasdaq Composite edged up 0.09% to 13,471.57. After tumbling 11% from its Feb. 12 record high through early March, the Nasdaq has mostly recovered and is now down about 4% from its all-time high close.
The S&P 500 energy index tumbled almost 3% after a drop in oil prices while financials and industrials also retreated more than 1%. The communication services and technology indexes both rose more than 0.7%.
The Russell growth index rose 0.37%, while the Russell value index fell 0.71% in a reversal of a recent trend away from technology and other high-growth stocks.
Ford Motor Co dropped 5.4% after announcing a $2 billion convertible debt deal.
Declining issues outnumbered advancing ones on the NYSE by a 1.77-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored decliners.
The S&P 500 posted 63 new 52-week highs and no new lows; the Nasdaq Composite recorded 220 new highs and 22 new lows.
Volume on U.S. exchanges was 12.2 billion shares, compared with the 14.4 billion average for the full session over the last 20 trading days.
Read more: Stocks that saw action Tuesday - and why
With files from Reuters
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