(Toronto) Canada’s main stock index lost more than 200 points Friday, weighed down by a broad-based decline. Wall Street also closed lower after the latest mixed labor report was released.
Markets were broadly lower on Friday, but technology stocks led the way, said Kathrin Forrest, equity investment specialist at Capital Group.
“Almost all of the ‘Magnificent Seven’ have backed down, albeit to varying degrees,” M said.me Forrest, adding that this day “closes a rather eventful first week of September.”
The S&P/TSX composite index closed down 206.85 points, or 0.9%, at 22,781.43.
In New York, the Dow Jones industrial average lost 410.34 points to 40,345.41. The S&P 500 index fell 94.99 points to 5,408.42, while the NASDAQ composite index fell 436.83 points to 16,690.83.
The much-anticipated U.S. jobs report showed that employers hired fewer workers than expected in August for the second month in a row.
Last week, a “sequence” of economic data releases indicated a slowdown in the economy, Mr.me Forest.
Investors are wondering whether the economy is slowing as it should under the weight of interest rate hikes or whether the U.S. Federal Reserve (Fed) waited too long to start cutting rates, the analyst said.
The data still points to a soft landing, she qualified.
Inflation has slowed and policymakers have turned their attention to the jobs market, and the Fed is expected to begin cutting rates this month.
Whether the cut is 25 or 50 basis points is “quite random,” Mr.me Forrest, but what’s more important is how much the Fed will cut rates over a longer period of time.
For now, markets are pricing in just over eight cuts by May.me Forrest thinks that would be a little too aggressive.
Mme Forrest said the tech sector continues to be extremely volatile, as companies involved in artificial intelligence have attracted a lot of investor interest, but also more recently concerns about the pace of capital spending.
However, she noted that recent earnings from these companies have been “largely constructive.”
In Canada, the latest jobs report, released Friday, showed that the unemployment rate increased in August while 22,000 jobs were created.
The Bank of Canada cut its rate for the third time earlier this week. North of the border, the economic situation is “not as constructive” as in the United States, Ms.me Forest.
“We’ve heard from the Bank of Canada in recent meetings that they now consider that the economy is in a situation of excess supply, and that includes the labour market,” she said.
The Canadian dollar was trading at 73.83 US cents versus 74.00 US cents on Thursday.
Crude oil fell $1.48 to $67.67 a barrel and natural gas rose three cents to $2.28 per million BTU.
Gold fell $18.50 to $2,524.60 an ounce and copper fell seven cents to $4.07 a pound.
With files from Associated Press