U.S. and Canadian stocks ended lower on Tuesday, with the S&P 500 putting in a fourth straight session of losses as valuation worries hit big technology-related shares and a disappointing forecast pressured Home Depot.
The four-day drop was the U.S. benchmark’s longest losing streak in three months.
Adding to caution, quarterly results from artificial intelligence and market leader Nvidia are due after the bell on Wednesday. The U.S. earnings season is near its end, but Nvidia’s results will be closely watched by investors worried about market gains tied to AI exuberance. Nvidia’s shares were 2.8% lower on the day.
The September U.S. jobs report is set to be released on Thursday after being delayed because of the long government shutdown. Earlier private market surveys have pointed to a cooling labor market. Data Tuesday showed the number of Americans on jobless benefits surged between mid-September and mid-October.
Shares of Home Depot dropped 6% after the home improvement chain gave a forecast for full-year profit that disappointed and missed quarterly earnings estimates.
Home Depot aside, earnings for this reporting period have been much stronger than expected. Year-over-year earnings growth for the S&P 500 is now at 16.9%, well above the 8.8% estimated at the start of October, according to the most recent LSEG data.
Indexes pared losses by midday before falling again. Some equities traders viewed the recent selloff as overdone, with traders at Jefferies, for instance, writing in a note that the market could be setting up for a bounceback. They noted that while megacaps are selling off sharply, “action under the hood is more mixed/slightly encouraging.”
The Dow Jones Industrial Average fell 498.50 points, or 1.07%, to 46,091.74, the S&P 500 lost 55.09 points, or 0.83%, to 6,617.32 and the Nasdaq Composite lost 275.23 points, or 1.21%, to 22,432.85.
The S&P/TSX composite index ended down 39.75 points, or 0.1%, at 30,036.46, its lowest closing level since November 7.
The Toronto market’s technology sector fell 1.1%, with shares of electronic equipment firm Celestica Inc ending 3.5% lower. Industrials were down 1% as railroad stocks lost ground.
Shares of Telus Corp dropped 5.3% after JP Morgan downgraded the telecommunications company to an “underweight” rating from “neutral.”
Energy in Toronto was up 1.9% as the price of oil settled 1.4% higher at US$60.74 a barrel. Investors weighed the impact of Western sanctions on Russian oil flows. Activist investor Elliott Investment Management has built a significant stake in Barrick Mining Corp, a source familiar with the matter said. Barrick’s shares gained 1.5%.
In the U.S., six of the 11 major S&P 500 sectors ended higher on the day, and the Russell 2000 small-cap index gained 0.3%. Among other megacaps that ended sharply lower, Amazon.com was down 4.4%.
Concerns over high valuations and dwindling expectations of a December interest rate cut have led to a pullback in U.S. stocks, with the S&P 500 down about 4% from its October peak.
The S&P 500 and the Nasdaq both closed below their 50-day moving averages on Monday, an important technical threshold, for the first time since late April.
On the Nasdaq, 2,353 stocks rose and 2,350 fell as advancing issues outnumbered decliners by a 1-to-1 ratio. Volume on U.S. exchanges was 18.66 billion shares, compared with the 20.2 billion average for the full session over the last 20 trading days.
Reuters, Globe staff