Toronto dragged lower by weaker energy stocks

Canada’s main stock index moved down on Thursday, led lower by weakness in energy and industrial stocks, while U.S. markets were mixed but largely positive as tech stocks rose.

The S&P 500 and the Nasdaq rose in a markedly different showing from Wednesday, when markets fell after a hotter-than-expected U.S. consumer inflation report.

“Yesterday was pretty pivotal as far as market movements,” said Michael Greenberg, senior vice-president and portfolio manager at Franklin Templeton Investment Solutions. Investors reassessed expectations for whether the U.S. Federal Reserve would cut interest rates this year, and by how much.

On Thursday, a lower-than-expected report on wholesale inflation helped ease some of the worries for investors.

In New York, the Dow Jones industrial average was down 2.43 points at 38459.08. The S&P 500 index was up 38.42 points at 5199.06, while the Nasdaq composite was up 271.84 points at 16442.20. The S&P/TSX composite index closed down 89.02 points at 22110.11.

The wholesale inflation report doesn’t change the fact that inflation has been higher and stickier in the U.S., said Greenberg, “but it at least tempered it a little bit.” The decline in inflation toward the Fed’s target was never going to be a straight line, he added.

“And it might take a little bit longer than many expected, especially looking at what expectations were more at the start of the year.”

The Bank of Canada, meanwhile, could cut as early as June even as markets have all but erased hopes the Fed will do the same. The central bank held its overnight rate steady on Wednesday, but with weaker economic data than its neighbour to the south, divergence between the two central banks’ policies is starting to show.

With earnings season coming up, it will be interesting to see whether companies meet or even beat expectations, which have been rising amid strong market performances and optimism about artificial intelligence, said Greenberg. “That will be something to watch, especially for some of those tech names.”

The Canadian dollar traded for 73.04 cents US compared with

73.15 cents US on Wednesday.

The May crude contract was down $1.19 US at $85.02 US per barrel and the May natural gas contract was down 13 cents at $1.76 US per mmBTU.

The June gold contract was up $24.30 US at $2,372.70 US an ounce and the May copper contract was down three cents at $4.25 US a pound.