Canada’s main stock market index fell on Tuesday to start the new month on a cautious note, weighed by losses for metal-mining shares as investors worried about an uncertain outlook for some major economies including China.
The S&P/TSX composite index ended down 93.71 points, or 0.5%, at 20,532.93, after posting its highest closing level in three months in the previous session. The S&P 500 and Nasdaq also closed lower.
“We are overbought and we’re pulling back,” said Robert McWhirter, a portfolio manager at Selective Asset Management Inc. “Everybody is still scratching their head about China.”
Global factory activity remained in a slump in July, private surveys showed, a sign slowing growth and weakness in China were taking a toll on the world economy, including Canada’s.
Canadian manufacturing activity slowed for the third straight month in July. The slowdown has occurred amid a sharp rise in interest rates and after the economy was buffeted in recent months by Canada’s worst-ever spring wildfire season and a dock workers strike at the country’s busiest ports.
A union representing dock workers on Canada’s West Coast will convene a special meeting with members on Wednesday to recommend they accept the latest offer from employers, the union said.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 1.8% as gold and copper prices fell.
Shares of Silvercrest Metals were particularly weak, plunging 21.5% after two brokerages cut their price target on the stock.
Heavily weighted financials fell 0.6% and healthcare was down 2%.
The TSX notched a gain of 2.3% in July, while it has advanced 5.9% since the start of the year.
U.S. stocks also ended July on a strong footing, as investors welcomed better-than-expected earnings. Support also came from hopes of a soft landing for the economy which has stayed resilient as inflation has cooled with rising interest rates.
The benchmark S&P 500 hit a 16-month high on Monday, and is less than 5% away from breaching its record high closing level notched on Jan. 3, 2022.
“It’s been a really good run in June, July. And everybody sort of knows that August was historically a pretty weak seasonal month,” said Scott Ladner, chief investment officer of Horizon Investments. “So I think people are just taking the opportunity to lighten up a little bit.”
Keeping a lid on the Dow’s losses, Caterpillar added 8.9% as the global economic bellwether reported a rise in second-quarter profit, though it warned of a sequential fall in current-quarter sales and margins.
Uber shed 5.7% after the ride-hailing company missed second-quarter revenue expectations.
Among pharmaceutical heavyweights, Pfizer edged lower in choppy trading after the drugmaker’s quarterly revenue fell short of Wall Street expectations, hit by declining sales of its COVID-19 products.
U.S. second-quarter earnings are now expected to fall 5.9% from a year earlier, Refinitiv data on Tuesday showed, compared with a 7.9% decline estimated a week earlier.
U.S. manufacturing appeared to have stabilized at weaker levels in July as new orders gradually improved, while a survey showed factory employment dropped to a three-year low, suggesting that layoffs were accelerating.
Shares of megacap growth companies such as Tesla and Amazon.com, whose valuations drop when borrowing costs rise, fell as the benchmark 10-year U.S. Treasury note yield climbed over 4%.
Arista Networks rose 19.7% as the network gear maker forecast quarterly revenue above estimates after delivering better-than-expected results.
The Dow Jones Industrial Average rose 71.15 points, or 0.2%, to 35,630.68. The S&P 500 lost 12.23 points, or 0.27%, at 4,576.73 and the Nasdaq Composite dropped 62.11 points, or 0.43%, to 14,283.91.
Volume on U.S. exchanges was 10.45 billion shares, compared with the 10.72 billion average for the full session over the last 20 trading days.
Shares of Norwegian Cruise Line tumbled 12.1% after it forecast third-quarter profit below estimates, citing higher costs.
JetBlue Airways stocks dropped 8.3% after it lowered its annual profit forecast due to a hit from the termination of its revenue-sharing deal with American Airlines .
Declining issues outnumbered advancers on the NYSE by a 2.16-to-1 ratio; on Nasdaq, a 1.67-to-1 ratio favored decliners.
The S&P 500 posted 23 new 52-week highs and three new lows; the Nasdaq Composite recorded 84 new highs and 70 new lows.
Reuters, Globe staff