Canada’s main stock market index ticked higher on Friday to cap a week of gains, while U.S. markets were mixed.
“It has been a bit of a rebound week,” said Michael Currie, senior investment adviser at TD Wealth, after last week saw a rough start to the month of August. Markets seem a little more optimistic than they did last week, he said.
In Canada, the S&P/TSX composite ended Friday up 0.85 per cent on the week, closing up 64.76 points on Friday at 20,407.64.
In New York, the Dow Jones industrial average increased 105.25 points to 35,281.40. The S&P 500 index dipped 4.78 points to 4,464.05, while the Nasdaq composite decreased 93.14 points to 13,644.85.
The Nasdaq ended down 1.9 per cent for the week amid a continued selloff in tech after the sector saw a “tremendous start to the year,” said Currie.
August is normally one of the worst months on the market as investors engage in some profit-taking around this time of year, he noted.
Friday saw a new report on producer prices in the U.S., which rose faster last month than in June. That came a day after the latest inflation print, which also reported prices rose faster in July.
While these could be taken as signs that the Federal Reserve’s tightening work on the economy isn’t done, Currie said investors seem to be looking at the bigger picture.
The price of oil continued to rise this week, hovering above US$83 per barrel Friday.
“It’s a seven-week winning streak for oil prices globally,” said Currie, despite a quiet start to the year for crude. Cuts from OPEC plus have helped buoy oil prices, he said, and summer demand has also been behind the boost. Meanwhile, despite China’s flagging economy, a recent report showed much of the growth in oil demand is coming from that major economy.
The September crude oil contract was up 37 cents at US$83.19 per barrel and the September natural gas contract was up one cent at US$2.77 per mmBTU.
The Canadian dollar traded for 74.39 cents US compared with 74.58 cents US on Thursday.
The December gold contract was down US$2.30 at US$1,946.60 an ounce and the September copper contract was down five cents at US$3.72 a pound.
In New York, the Nasdaq and the S&P 500 recorded a second straight weekly decline, as hotter-than-expected U.S. producer prices data pushed Treasury yields higher and sank rate-sensitive megacap growth stocks. It was also the first time this year that the Nasdaq notched two weekly losses in a row.
The U.S. producer price index (PPI) climbed 0.8% in the 12 months leading to July, up from a 0.2% rise in the previous month, as costs of services increased. Economists polled by Refinitiv had expected a 0.7% gain.
Though traders broadly expect the Federal Reserve to refrain from tightening credit conditions for the rest of the year, bets for no rate hike in September slipped to 88.5% from 90% before the data landed.
“We’ve seen some material news and data in recent days but the market has chosen to trade sideways, which tells us that the market had priced in everything and has not been pleasantly or unpleasantly surprised,” said Jason Betz, private wealth adviser at Ameriprise Financial.
Yield on the two-year U.S. Treasury note, that moves in line with near-term interest rate expectations, climbed to 4.88%.
This move weighed on big tech names, as high interest rates could slow the economy and dent the ability of these firms to achieve the growth projections which have pushed them to premium valuations. Higher rates can also make interest-bearing bonds an attractive alternative to stocks for some risk-averse investors.
Tesla and Microsoft both closed down.
A fall in Nvidia weighed on the semiconductor index, which posted its fourth straight decline and its eighth loss in nine sessions.
Megacap growth and technology stocks have led outsized gains this year in the tech-heavy Nasdaq and the S&P 500. But after a five-month stretch of advances, August has so far been marked by a more cautious approach from investors.
“Time will tell if we are correct on this, but with the run that tech has had, it’s hard not to want to do a bit of profit-taking,” said Ameriprise’s Betz.
According to preliminary data, the S&P 500 lost 4.52 points, or 0.10%, to end at 4,464.31 points, while the Nasdaq Composite lost 73.83 points, or 0.54%, to 13,647.20. The Dow Jones Industrial Average rose 105.52 points, or 0.30%, to 35,281.67.
U.S. consumer sentiment dipped in August, yet Americans were optimistic that inflation will edge lower over the next year and beyond, according to a preliminary reading of a University of Michigan survey.
Amid the major S&P sectors, health care and energy sectors advanced. Both have been among the worst performing industries this year, although energy matched its strongest run this year by closing higher for the seventh straight session.
The energy sector’s increase was aided by crude prices rising on forecasts for tightening supplies from the International Energy Agency. Occidental Petroleum Corp was among the biggest gainers, after one of its units secured a grant from the U.S. government to support its carbon capture ambitions.
Among other movers, News Corp rose after the Rupert Murdoch-owned media conglomerate beat quarterly profit estimates, thanks to its cost-cutting efforts.
U.S.-listed shares of Chinese companies Alibaba and JD.com fell as Beijing’s latest stimulus measures disappointed investors, while fresh data showed that the country’s post-pandemic recovery was losing steam.
The Canadian Press, Reuters
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