TSX edges off record after blowout jobs report

TORONTO — Canada’s main stock index edged lower Friday after closing at a record high the day before as markets reacted to a much stronger-thanexpected jobs report, while U.S. stock markets were mixed.

The S&P/TSX composite index closed down 66.90 points at 22,308.93.

In New York, the Dow Jones industrial average was up 125.08 points at 39,512.84.The S&P 500 index was up 8.60 points at 5,222.68, while the Nasdaq composite was down 5.40 points at 16,340.87.

Markets on both sides of the border are much more uncertain now than they were heading into 2024, said Adelaide Chiu, portfolio manager, vice-president and head of responsible investing at NEI Investments.

“I think at the beginning of the year, had you asked anyone, they would have said that rate cuts would have happened a lot sooner than what they’re experiencing now,” she said.

Near the halfway point, valuations are high and markets are doing well, but volatility over interest rate cuts is high, said Chiu. Economic data in the U.S. has shown surprising resiliency, pushing back cut expectations significantly, while in Canada the economy has weakened more, leading many to bet on cuts starting in June.

However, Friday’s jobs report in Canada complicated that view, said Chiu.

The economy saw its largest employment increase in more than a year in April, making the odds of a June cut lower as the unemployment rate held steady.

The Bank of Canada is in a tough spot, said Chiu, as it risks cutting too early and reigniting inflation, or cutting too late and boosting chances of a recession. “It’s a slow bleed,” said Chiu. “The longer interest rates remain at this level … the consumer will feel that more so because of mortgage rates.”

In the U.S., a preliminary report from the University of Michigan suggested sentiment among consumers is weakening by much more than economists expected.

Though that report showed softness, the overall economic picture painted by recent data in the U.S. has been muddy, said Chiu.

“I think that’s where a lot of the confusion lies,” she said. “It’s hard to read the data.”

Next week will see several major economic reports in the U.S. that could prompt more movement in markets, said Chiu, including consumer price inflation and producer price inflation.

The Canadian dollar traded for 73.18 cents US compared with 73.04 cents US on Thursday.

The June crude oil contract was down $1.00 US at $78.26 US per barrel and the June natural gas contract was down five cents at $2.25 US per 1,000 cubic feet.

The June gold contract was up $34.70 US at $2,375 US an ounce and the July copper contract was up seven cents at $4.66 US a pound