Stocks mixed as U.S dollar and bond yields strengthen

North American equity markets saw weak performances on Tuesday, as strength in the U.S. dollar and bond yields placed downward pressure on energy and gold prices.

Michael Greenberg, senior vicepresident and portfolio manager of Franklin Templeton Investment Solutions, said financial stocks were able to benefit from the strength in U.S. bond yields, as the 10-year benchmark rose to 1.373 per cent.

“A lot of stuff is being driven today by what bond yields are doing,” said Greenberg. “That correlates with energy, so you’ve got energy down a little bit and the Canadian dollar down a little bit … and things like financials outperforming.”

The S&P/TSX composite index was down 14.80 points at 20806.63.

In New York, the Dow Jones industrial average was down 269.09 points at 35100.00. The S&P 500 index was down 15.40 points at 4520.03, while the Nasdaq composite was up 10.81 points at 15374.33.

The Canadian dollar was weaker against the greenback Tuesday, with the loonie trading for 79.23 cents US compared with 79.88 cents US on Friday.

The result was some weakness in commodity prices, with the December gold contract down $35.20 US at $1,798.50 US an ounce and the December copper contract down five cents at $4.28 US a pound.

Oil and gas prices also took a slight hit, but Greenberg said the current environment where economies are slowly reopening has kept oil prices at a relatively consistent level.

The October crude oil contract was down 94 cents at $68.35 US per barrel, and the October natural gas contract was down 14 cents at $4.57 US per mmBTU.

“With COVID, it’s been a bit of a twosteps-forward-one-step-back kind of environment where you get better news on vaccinations and re-openings, but as we’re seeing with the Delta variant, a bit of a setback on those reopening plans,” said Greenberg.

Meanwhile, cryptocurrencies saw a significant selloff on Tuesday following two months of strong performances from big names such as Bitcoin and Ethereum.

Bitcoin fell from $66,000 to about $59,000 in less than a day, while Ethereum lost more than 11 per cent of its value in a 24-hour period.

Greenberg said cryptocurrencies had been rallying on news that El Salvador would use Bitcoin as legal tender, but faltered when the implementation of the country’s app for the currency had technical issues on Tuesday.

“You have to remember the volatility in cryptocurrencies is extremely high,” said Greenberg.

Bitcoin had nearly doubled in value from $37,000 over the previous two months before the sell-off on Tuesday.