Canada’s main stock index closed slightly lower after reaching an intraday record but ended August by notching a seventh straight month of gains for the longest streak in more than four years.
The S&P/TSX composite index closed down 12.03 points, or 0.06%, to 20,582.94. The slight decline came despite a major rally in shares of widely held Canadian National Railway Co. after its nearly US$30-billion offer to acquire Kansas City Southern was put in serious doubt as U.S. regulators rejected a plan to use a voting trust to make the purchase.
CN shares spiked 7.36%. Kansas City Southern dropped 4.39%. CP Rail, which had made a rival offer for the U.S. railway and could potentially re-enter the fray, lost 4.55%.
Wall Street finished marginally lower as well, although the slightly subdued ending to August failed to detract from a strong monthly performance by its three main indexes, in what is traditionally regarded as a quiet period for equities.
Having all posted lifetime highs in the second half of the month, including four record closings in five sessions for the S&P 500 prior to Tuesday, the three U.S. benchmarks were weighed by technology stocks on the final day.
For the S&P, which rose 2.9% in August, it was a seventh straight month of gains, while the Dow and the Nasdaq advanced 1.2% and 4%, respectively, since the end of July.
The performance reflects the level of investor confidence in U.S. equities derived from the Federal Reserve’s continued dovish tone toward tapering its massive stimulus program.
“After all the monetary and fiscal interventions, the question is where do we go from here? Does the S&P go to 5,000, and how does it get there?” said Eric Metz, chief executive officer of SpringRock Advisors.
While a strong recovery in economic growth and corporate earnings have boosted U.S. stocks, investors are concerned about rising coronavirus cases and the path of Fed policy.
U.S. consumer confidence fell to a six-month low in August, according to survey data from the Conference Board on Tuesday, offering a cautious note for the economic outlook.
A Reuters poll last week showed strategists believe the S&P 500 is likely to end 2021 not far from its current level.
“Where’s leadership going to come from, for equities to power higher? Is it earnings growth, is it growth versus value, technology or energy? This needs to be defined, but I think the next leg-up for equities will be sector driven,” Metz added.
Technology stocks have continued to garner interest from investors in recent days, given the benefits which lower rates have on their future earnings, although the sector’s index was among the worst performers on Tuesday.
Shares of Apple fell 0.8% after hitting a lifetime high in the previous session, while Zoom Video Communications Inc tumbled 16.7% as it signaled a faster-than-expected easing in demand for its video-conferencing service after a pandemic-driven boom.
Seven of the 11 major S&P sectors retreated. Among those that did not were the real estate and the communications services indexes, which closed at record highs.
On Tuesday, the Dow Jones Industrial Average fell 39.11 points, or 0.11%, to 35,360.73, the S&P 500 lost 6.11 points, or 0.13%, to 4,522.68 and the Nasdaq Composite dropped 6.66 points, or 0.04%, to 15,259.24.
Volume on U.S. exchanges was 9.84 billion shares, compared with the 8.98 billion average for the full session over the last 20 trading days. The S&P 500 posted 43 new 52-week highs and no new lows; the Nasdaq Composite recorded 119 new highs and 23 new lows.
The Canadian dollar traded for 79.26 cents US compared with 79.35 cents US on Monday.
The October crude oil contract was down 71 cents at US$68.50 per barrel and the October natural gas contract was up 7.2 cents at US$4.38 per mmBTU.
The December gold contract was up US$5.90 at US$1,818.10 an ounce and the December copper contract was down slightly to US$4.38 a pound.
Reuters, The Canadian Press, Globe staff
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