Canada’s main stock index fell early Wednesday, dragged down by weak healthcare and technology stocks amid growing concerns that strict policy tightening by central banks to tackle inflation will push economies into recession.
In morning trading, the S&P/TSX Composite Index on the Toronto Stock Exchange was down 75.31 points, or 0.39%, to 19,147.43.
US stocks also fell at the open after many policy makers called for faster rate hikes to curb inflation as a string of recent data continued to paint a bleak picture of the economy.
“Concerns are growing again about how much interest rates will need to rise to curb inflation and what this means for growth,” said Stuart Cole, chief macroeconomist at Equiti Capital.
“I think sentiment is shifting to the view that the US Federal Reserve will not be able to avoid a hard landing and that the US economy is destined to slide into recession.”
Healthcare and technology stocks led losses on the Canadian index as both fell 3.1% and 2.1%, respectively.
Limiting further losses lifted the energy sector by 0.5% as oil prices rose for the fourth consecutive session as concerns of tight supply offset concerns about a weak global economy.
The financial sector declined by 0.2%, while the industrial sector declined by 0.3%.
The benchmark, which is down 12.5% so far this quarter, was on track to post its worst quarterly performance since the pandemic-induced recession in 2020.
The materials sector, which includes mining, precious metals and fertilizer companies, gained 0.1% in early trade as gold futures rose 0.6% to $1,827.8 an ounce.
US data on Wednesday highlighted the US economy contracting in the first quarter amid a record trade deficit after Tuesday’s report that showed US consumer confidence hit a 16-month low.
Markets on Wall Street were volatile in the first hour of trading, as investors pointed to the quarterly rebalancing of portfolios as well as increased volatility.
“(Portfolio rebalancing) has been part of the reason why you have been up a little bit in the market over the past week, although it seems to be fading as the weakness that preceded the pullback to lows in mid-June brought in large stock allocations, said Liz Ann Saunders, Investment Analysts at Charles Schwab & Co.
Federal Reserve Chairman Jerome Powell said there was a risk that higher interest rates would slow the economy too much, but persistent inflation was the biggest concern.
Loretta Meester, president of the Federal Reserve Bank of Cleveland, called for a rate hike of another 75 basis points at the US central bank meeting in July, if economic conditions remain the same.
San Francisco Fed President Mary Daly and New York Fed President John Williams also supported more rapid interest rate increases on Tuesday and repelled fears that sharply higher borrowing costs could trigger a sharp slowdown.
Goldman Sachs Group Inc stock rose 1.3%, boosting the blue-chip Dow Jones industrial index, after BofA Global Research upgraded the investment bank to “buy” from “neutral”, saying it was well positioned to outperform. In a likely deteriorating economic environment.
The S&P 500 was on track for its biggest first-half drop since 1970, and along with the Dow and Nasdaq were headed for a second consecutive quarterly decline for the first time since 2015.
At 10:28 AM ET, the Dow Jones Industrial Average rose 95.03 points, or 0.31%, to 31,042.02 points, the S&P 500 rose 0.97 points, or 0.03%, to 3,822.52 points, and the Nasdaq Composite fell 8.27 points, or 0.07% . at 11173.27.
General Mills gained 5.6% after sales of the Cheerios maker beat estimates despite higher prices.
Bed Bath & Beyond Inc stock fell 21.8% after the home goods retailer reported a decline in similar quarterly sales and said its chief executive, Mark Triton, had resigned.
Declining issues outnumbered advanced stocks by 2.26 to 1 on the New York Stock Exchange and 2.56 to 1 on the Nasdaq.
The S&P recorded a new 52-week high and 35 new lows, while the Nasdaq recorded eight new highs and 182 new lows.
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