Canada’s commodity-linked main stock index on Wednesday extended its pullback from a record high as oil and gold prices dropped, and after some of Canada’s major banks reported quarterly results.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 241.82 points, or 0.7%, at 34,412.05, marking its second straight day of losses after touching a record closing high on Monday.
Canada’s main stock index is set to post additional record highs this year and in 2027 as elevated commodity prices and the potential for energy companies to benefit from the increasing power needs of artificial intelligence offset trade uncertainty, a Reuters poll found.
Canadian banks BMO Financial, Bank of Nova Scotia and National Bank of Canada beat analysts’ estimates for quarterly profits, strengthened by domestic business and capital markets income, while signaling an optimistic outlook for Canada despite tensions in the Middle East.
“There may be a ’sell the news’ phenomenon with respect to the banks,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth. “They do have good earnings, but their stock prices have gone way up in advance of these earnings.”
Shares of BMO and Scotiabank rose 0.8% and 0.5% respectively, while National’s shares were down 4%.
The price of oil settled 5.55% lower at $88.68 a barrel. President Donald Trump said the United States and Iran still have issues to resolve in peace talks, after Washington dismissed an Iranian state television report of a framework deal to restore shipping through the Strait of Hormuz within a month.
Energy fell 2.4% and the materials group , which includes metal mining shares, was down 2.2%.
The price of gold dropped 1.2% on expectations of tighter monetary policy to fend off rising inflation.
Helping to limit the TSX’s losses, the consumer staples group rose 1.3% and industrials ended 0.6% higher.
South of the border, rising healthcare and consumer stocks boosted the Dow Jones Industrial Average on Wednesday to a record closing high, while the S&P 500 and the Nasdaq were steady, as investors took a pause from the AI-led market rally while cautiously watching Middle East peace talks.
Banking stocks were down as shares of JPMorgan Chase slid after CEO Jamie Dimon warned that expenses this year could be $1 billion higher than estimated.
The Dow, which hit closing highs on Friday and Thursday, was lifted by a rotation into healthcare and consumer stocks such as Procter & Gamble .
However, a pullback in chip stocks weighed on the tech-heavy Nasdaq.
According to preliminary data, the S&P 500 gained 1.81 points, or 0.02%, to end at 7,520.93 points, while the Nasdaq Composite gained 18.55 points, or 0.08%, to 26,676.60. The Dow Jones Industrial Average rose 189.08 points, or 0.37%, to 50,650.76.
“After such a large run-up in the markets, it’s not surprising to me that there is a little bit of a pause,” said Sean Clark, chief investment officer of Clark Capital Management Group.
“There’s a lot of positives to look at right now. Even though the outperformers are really being driven by tech, AI and AI adjacent themes, I wouldn’t discount the fact that the broad market is participating as well.”
Among the sub-indexes, consumer discretionary was leading the gains.
Meanwhile, the S&P 500 energy index fell, tracking a decline of as much as 5% in oil prices. Tech shares dropped after reaching an all-time high on Tuesday.
Chip stocks were down after a strong rally. Intel fell and Marvell Technology fell, while Qualcomm fell sharply after sharp gains Tuesday.
Chip giant Nvidia weakened and the Philadelphia SE Semiconductor index lost after hitting a record high on Tuesday.
“Technology leadership remains difficult to ignore, with the sector continuing to push to new highs on both an absolute and relative basis compared to the broader market,” said Adam Turnquist, chief technical strategist, LPL Financial.
“That said, increasingly stretched momentum conditions and elevated positioning raise questions around the near-term durability of the advance.”
Zscaler tumbled after the cloud security firm projected fourth-quarter revenue below expectations.
Among other movers, GlobalFoundries fell after Bloomberg News reported that majority owner Mubadala Investment Company was seeking to raise $1.91 billion from an unregistered block sale of GFS shares.
Bath & Body Works jumped after reporting first-quarter sales and profit above expectations, while Abercrombie & Fitch advanced on posting a strong quarterly profit. Goldman Sachs raised its 2026 year-end forecast for the S&P 500 to 8,000 from 7,600, citing continued strength in corporate earnings.
Markets will next look toward the personal consumption expenditures index data on Thursday. The Federal Reserve’s key inflation measure could provide fresh clues on the monetary policy path forward under new chair Kevin Warsh.
- Reuters