Tech stocks pressured, energy weighs down TSX
Canada’s main stock index closed down Wednesday as commodity prices slipped, while increased scrutiny on U.S. technology stocks put downward pressure on U.S. markets.
The day’s market drop follow a trend of down days recently as concerns over trade wars and regulatory investigations into premier tech stocks have rumbled markets, said Norman Levine, managing Director of Portfolio Management Corp. in Toronto.
“It’s generally got a negative tone to it, and it’s continuing to be led by the high-flying tech stocks for the most part.”
The S&P/TSX composite index closed down 46.24 points at 15,169.94, driven by base metals and materials as worries about Chinese growth and demand increase, said Levine. “Metal stocks are more worried about growth in China and they need that for higher metal prices, and metal prices aren’t doing a whole lot right now, and gold is weak today as well.”
In New York, the Dow Jones industrial average closed down 9.29 points at 23,848.42. The S&P 500 index closed down 7.62 points at 2,605.00 and the Nasdaq composite index was down 59.58 points to 6,949.23.
The declines included losses from major U.S. tech stocks, with Amazon falling on reports U.S. President Donald Trump is looking to go after the company and Tesla declining on a downgraded credit rating and more concerns over the self-driving vehicles, following recent declines at Facebook and Twitter.
Shares of Amazon plunged after a report that Trump is “obsessed” with the e-commerce giant and wants to “go after” the company.
News site Axios reported that Trump brings up Amazon when discussing tax policy and antitrust cases. The president reportedly hears from real estate friends that the Seattle-based online giant is destroying shopping malls, mom-and-pop stores and brick-and-mortar retailers — and he believes them.
According to an unidentified source that spoke to Trump, the president has “wondered aloud if there may be any way to go after Amazon with antitrust or competition law,” Axios reported.
Amazon stock was down 6.4 percent Wednesday morning.
Trump has repeatedly posted on Twitter about Amazon over the past year. In August, he wrote that the company was “doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!”
Trump’s ire has also extended to the Washington Post, which is owned by Amazon CEO Jeff Bezos. The president has frequently referred to the Post as the “Amazon Washington Post.”
“The big story here is the big tech stocks trading at multiples that make no sense, but they were going up purely on momentum, the wind is coming out of the sail here, and they’re looking vulnerable and bringing down the rest of the market with them,” said Levine.
The decline in stocks was felt in Canada as well, where BlackBerry Ltd. beat analyst expectations with $233 million US of revenue for the last quarter, but slipped 1.38 per cent to $15.76 on the TSX.
The stock losses from particular issues at larger technology companies are, however, likely distorting the view of the overall health of market because they have so much sway over some of the indexes, said Levine. “Indexes are going to show, especially in the U.S., more negative than what’s going on with the average stock.”
The Canadian dollar closed at 77.51, down 0.2 of a US cent.
The May crude contract ended down 87 cents at US$64.38 per barrel and the May natural gas contract was down two cents at US$2.69 per mmBTU. The June gold contract closed down US$17.90 to US$1,330.00 an ounce and the May copper contract was even at US$3 a pound.