TORONTO 鈥� Canada's main stock index slumped again on Thursday, dragged lower by losses in sectors like industrials and real estate, while U.S. markets rose a day after one of their worst declines of the year.
The S&P/TSX composite index was down 143.06 points at 24,413.94.
In New York, stocks recovered a portion of their losses from Wednesday after the latest comments from the U.S. Federal Reserve about the pace of future interest rate cuts.
The Dow Jones industrial average was up 15.37 points at 42,342.24. The S&P 500 index was down 5.08 points at 5,867.08, while the Nasdaq composite was down 19.93 points at 19,372.77.
鈥淭here鈥檚 still some caution after yesterday鈥檚 outsized move,鈥� said Angelo Kourkafas, senior investment strategist at Edward Jones.
鈥淢arkets are still dealing with the aftermath of the Fed meeting yesterday.鈥�
On Wednesday, the Fed cut its key interest rate by a predicted quarter-percentage point. The cut wasn鈥檛 a surprise, said Kourkafas, but the accompanying projections from the Fed were: an expected two cuts in 2025, instead of the four previously forecast by the central bank.
The central bank signalled it鈥檚 moving into a new phase, and they don鈥檛 expect inflation to move back into target in 2025, said Kourkafas.
鈥淢arkets are back in the mode of high interest rates for longer.鈥�
The announcement highlighted the fact that the U.S. economy continues to fare better than the Canadian economy, said Kourkafas, which means in the new year, interest rates in Canada could continue to diverge from those south of the border.
鈥淚 think the concern about divergence is reflected in the Canadian dollar, which is at near a five-year low,鈥� he said.
The Canadian dollar traded for 69.59 cents US compared with 69.72 cents US on Wednesday, continuing its downward trajectory.
However, some of the economic benefit from the Bank of Canada鈥檚 more aggressive rate cuts should start flowing through the economy, Kourkafas added.
With the last expected market catalyst out of the way 鈥� the Fed decision 鈥� markets will likely stabilize and calm down through the end of the year, said Kourkafas.
He noted that despite Wednesday鈥檚 meltdown, it鈥檚 been a strong year for markets overall.
鈥淎fter a year where we have seen very strong gains and sentiment has been very optimistic, it is not too surprising to see some caution and investors being defensive in the last couple of days before the year ends.鈥�
The February crude oil contract was down 64 cents at US$69.38 per barrel and the January natural gas contract was up 21 cents at US$3.58 per mmBTU.
The February gold contract was down US$45.20 at US$2,608.10 an ounce and the March copper contract was down eight cents at US$4.08 a pound.
鈥� With files from The Associated Press
This report by The Canadian Press was first published Dec. 19, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
