The Canadian benchmark stock index started the week by closing at a fresh record high, propelled by rallies in both the materials and energy sectors, even as U.S. stocks finished lower amid ongoing concerns about inflation and looming tighter monetary policy.
Gold climbed to its highest level in more than three months, while Brent crude tested the US$70 per barrel level.
The S&P/TSX Composite Index closed up 107.96 points, or 0.56%, at 19,474.65.
That only modestly surpassed the previous record high set on May 7, by less than two points. But the gains looked impressive on a day when Wall Street couldn’t pull out of the red.
The TSX energy sector rallied 2.88% and materials 3.03%. While the financials sector gained 0.30%, most other sectors were lower for the day.
In the U.S., of the 11 major S&P 500 sectors that declined, technology and communication services were among the biggest losers. Each were down between 0.7% and 0.9%.
“What is causing the decline, no surprise to anybody, is the worry about inflation and interest rates,” said Sam Stovall, chief investment strategist at CFRA Research in New York.
“As a result that’s causing the growth group, in particular technology and consumer discretionary stocks, to experience weakness, while some of the more value-oriented groups are holding up a bit better.”
The S&P 500 scored its biggest one-day jump in more than a month on Friday as investors picked up beaten-down stocks following a pullback earlier in the week on worries about inflation and a sooner-than-expected tightening by the U.S. Federal Reserve.
The Dow Jones Industrial Average fell 56.12 points, or 0.16%, to 34,326.01; the S&P 500 lost 10.42 points, or 0.25%, at 4,163.43; and the Nasdaq Composite dropped 50.93 points, or 0.38%, to 13,379.05.
Earnings this week will be scrutinized for clues on whether rising prices had any impact on consumer demand and if retailers can sustain their strong earnings momentum.
Cryptocurrency-related stocks like Marathon Digital, Riot Blockchain and Coinbase fell between 3% and 7% as bitcoin swung in volatile trading after Tesla Inc boss Elon Musk tweeted about the carmaker’s bitcoin holdings.
With the earnings season at its tail end, overall earnings for S&P 500 companies are expected to have climbed 50.6% from a year ago, according to Refinitiv IBES, the strongest pace in 11 years.
AT&T Inc, owner of HBO and Warner Bros studios, and Discovery Inc, home to lifestyle TV networks such as HGTV and TLC, said on Monday they will combine their content assets to create a standalone global entertainment and media business. AT&T shares declined 2.69%, while Discovery fell about 5.04%.
Volume on U.S. exchanges was 9.8 billion shares, compared with the 10.5 billion average over the last 20 trading days. Advancing issues outnumbered decliners on the NYSE by a 1.13-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers. The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 110 new highs and 63 new lows.
Gold prices rose, with the precious metal appealing to cautious investors as U.S. Treasury yields remained subdued even as stock prices fell on inflation worries.
Spot gold jumped 1.3% to $1,866.84 per ounce by 1:50 p.m. EDT (1750 GMT), after hitting its highest since Feb. 1 at $1,868.26. U.S. gold futures settled up 1.6% at $1,867.60.
“There’s a flight to safety out of the equity markets ... and anticipation that we’re going to continue to see inflation numbers trend much stronger going forward,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.
Oil prices rose more than 1%, lifted by European economic reopenings and rising U.S. demand after prices fell earlier due to surging coronavirus cases in Asia and underwhelming Chinese manufacturing data.
Brent crude ended the session up 75 cents, or 1.1%, at $69.46 a barrel and West Texas Intermediate (WTI) crude settled 90 cents, or 1.4%, higher at $66.27.
The British economy reopened, giving 65 million people a measure of freedom after a four-month COVID-19 lockdown.
With accelerating vaccination rates, France and Spain have relaxed COVID-related restrictions, and on Saturday, Portugal and the Netherlands eased travel restrictions.
The promise of economic growth has supported oil prices in recent weeks, although the pace of inflation has kept many investors concerned that interest rates could rise, which could hit consumer spending.
“The news is not all negative on the demand front as the U.S. saw air travel jump on Sunday to 1.8 million people, the highest total since March 2020,” said Edward Moya, senior market analyst at OANDA.
United Airlines announced it will add 400 daily flights to July for European destinations, Moya noted.
Summer travel bookings rose 214% from 2020 levels, the airline said, adding it planned to fly 80% of its U.S. schedule compared with July 2019.
Investors remained worried about the coronavirus variant first detected in India. Some Indian states said on Sunday they would extend lockdowns to fight the pandemic, which has killed more than 270,000 people there.
Read more: Stocks that saw action on Monday - and why
Reuters, Globe staff
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Darcy Keith