The Toronto Dominion (TD) bank logo is seen on a building in Toronto, Ontario, Canada March 16, 2017.
On Wednesday, Canada’s main stock index hit a low point that hasn’t been seen in almost two weeks. This occurred as a result of the Bank of Canada’s most recent interest rate cut having a smaller impact on the market than it did on high-flying technology stocks.
After falling from a record high last week, the S&P/TSX composite index finished the day down 174.18 points, or 0.8%, at 22,639.57. This was the lowest level it had reached since July 11.
“It’s mostly about making money.” Over the last few weeks, stocks that did the best are now doing the worst,” said Joseph Abramson, co-chief investment officer at Northland Wealth Management.
The S&P 500 and Nasdaq fell to multi-week lows after Tesla and Alphabet reported disappointing earnings. This made investors unsure of the long-term viability of the big tech and AI-driven 2024 stock market rally.
The technology sector of the Toronto market went down 2.2%, while the highly weighted financials sector went down 0.7% and the industrials sector went down 1.3%.
Shares of Canadian National Railway dropped 3.2% after the company’s results for the second quarter were worse than expected.
“The moves are countertrend in nature because both monetary and fiscal policy remain supportive of accelerating growth and earnings,” said Abramson.
There was a 25 basis point drop in the Bank of Canada’s key interest rate for the second month in a row, taking it to 4.5%. The bank said that more rate cuts would likely happen if inflation continued to drop as expected.
One of only two sectors to gain ground, adding 0.6%, was utilities. This group is made up of stocks that pay big dividends and could benefit from lower interest rates.
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