Canada’s main stock index fell on Monday, reversing course after hitting another record high earlier in the day, as investors booked profits amid surging commodity prices. Major U.S. indexes, however, managed to hold on to most of their gains and ended higher.
The S&P/TSX Composite Index was down 51.66 points, or 0.16%, at 33,093.32. It earlier hit a record high of 33,428.44.
Bombardier was the biggest loser on the index, falling 9.3%. A twin-engine Bombardier jet crashed on Sunday while taking off from a Maine airport with eight aboard.
Surging prices of precious metals powered mining shares, outweighing trade uncertainty sparked by U.S. President Donald Trump’s threat to impose 100% tariffs on Canada.
Gold miners climbed 0.9% in Toronto, as gold gained after briefly moving past US$5,100 per ounce. Silver extended its record run, while copper prices also gained.
“The commodities, which really carried the TSX to start the year, are starting to look a little overbought... that’s just showing some risk in the markets. We’ve had a really good run for the last few months, and we’re starting to see a little bit of profit taking,” said Greg Taylor, chief investment officer at PenderFund Capital Management.
Gold has built on last year’s stellar gains, fueled by geopolitical tensions and concerns over the Federal Reserve’s autonomy. Analysts, however, warn that the rally may not be sustainable.
Financial stocks fell 0.5% while the energy index rose 0.5%.
The TSX’s decline came after Trump on Saturday threatened a 100% tariff on Canada if it follows through on a trade deal with China.
Prime Minister Mark Carney responded on Sunday that Canada respects its commitments under the United States-Mexico-Canada trade agreement to not pursue free trade agreements with China or other “non-market economies.” China in response to U.S. threats of tariffs on Canada responded that the bilateral economic and trade agreements are not targeted at any third party.
On Wall Street, both the S&P 500 and Nasdaq hit their highest levels in more than a week and registered their longest string of advances since December.
Gains in a handful of mega-cap names did most of the heavy lifting for the S&P 500, with Apple, Microsoft, Alphabet, Meta and Broadcom offering the benchmark’s top boosts.
Apple, Meta, Microsoft and Tesla are slated to report quarterly results later this week, setting up a key test for a rally powered by euphoria around AI.
Investors will look for signs of measurable payoffs from AI spending. With concerns over high valuations in the tech space, guidance will be especially important and even a modest stumble could spark a rethink about the AI trade.
“You’re seeing communications and technology are trading well today in advance of the earnings from a lot of the large companies,” said Chris Zaccarelli, chief investment officer of Northlight Asset Management in Charlotte, North Carolina.
“It seems like we’re having an expansion in corporate profits and an expansion in the economy, so generally speaking, investors are cautiously optimistic and most likely looking forward to earnings season.”
Of the 64 companies in the S&P 500 that had reported earnings as of Friday, 79.7% beat analyst expectations as per data compiled by LSEG.
The Dow Jones Industrial Average rose 313.69 points, or 0.64%, to 49,412.40, the S&P 500 gained 34.62 points, or 0.50%, to 6,950.23 and the Nasdaq Composite gained 100.11 points, or 0.43%, to 23,601.36.
Communications services finished up 1.3% and was the biggest gainer among the S&P 500’s 11 major industry sectors while consumer discretionary was the biggest laggard with a 0.7% decline.
The S&P 500’s biggest drag was Tesla, which ended down 3%.
Also on investors’ minds was the Fed meeting, which starts on Tuesday and ends with a policy update on Wednesday afternoon. Traders see a roughly 97% probability that the central bank will hold rates steady, according to CME Group’s FedWatch, but investors will hope for clues on its future rate path.
The decision may risk being overshadowed by fresh questions over the central bank’s independence after the Justice Department opened a probe into Fed Chair Jerome Powell this month, and Trump said he may pick the next Fed chair soon.
The Bank of Canada is also widely expected to announce no change in its trend-setting interest rate on Wednesday.
In individual U.S. stocks, shares of Intel sank 5.7% after falling 17% on Friday for their steepest drop in nearly 18 months after the chipmaker forecast quarterly profit and revenue below estimates.
Meanwhile, JetBlue dropped 3.8% as the airline sector dealt with the aftermath of mass disruptions in flight schedules after a massive winter storm hit the United States.
Shares of prison operators GEO Group and CoreCivic, which have contracts with U.S. Immigration and Customs Enforcement, fell sharply as U.S. Senate Democrats said they will oppose a funding bill for the Department of Homeland Security, which oversees ICE. The fatal shooting of a 37-year-old nurse, Alex Pretti, in Minneapolis on Saturday has escalated a public backlash against Trump’s approach to immigration. GEO shares fell 9.3% for their biggest daily loss since August and CoreCivic fell 7%, its biggest drop since November.
Shares of USA Rare Earth rallied 7.9% after reports that the U.S. administration was taking a 10% stake in the miner as part of a $1.6 billion debt-and-equity investment package. Elsewhere CoreWeave climbed 5.7% after Nvidia said it would invest $2 billion in the cloud infrastructure firm.
Advancing issues outnumbered decliners by a 1.37-to-1 ratio on the NYSE where there were 631 new highs and 63 new lows. On the Nasdaq, 2,360 stocks rose and 2,465 fell as declining issues outnumbered advancers by a 1.04-to-1 ratio. On U.S. exchanges 18.41 billion shares changed hands on Monday compared with the 17.60 billion 20-day average.
Reuters, Globe staff