Canada’s S&P/TSX Composite Index fell on Wednesday as Shopify’s downbeat forecast for revenue growth hammered the heavily weighted stock and investors took note of recent gains for the market that had taken it within striking distance of a record high.
The information technology sector dropped 4.2%, pulled down by an 18.5% decline in the shares of Shopify Inc after the e-commerce company forecast its slowest quarterly revenue growth in two years.
It was the biggest percentage decline for Shopify since going public in May 2015.
The benchmark index ended down 31.46 points, or 0.1%, at 22,259.16. It had closed higher in the previous five sessions on rising optimism that the Federal Reserve’s next move would be to cut interest rates.
“It is just some rebalancing after the move higher over the last few days,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth. “Big picture, you are seeing individual stocks very much impacted by their earnings numbers. The bar’s been set fairly high so for companies to beat you need to not just provide good numbers, you also have to give a rosy outlook.”
Most other TSX sectors ended higher, with heavily-weighted financials rising 0.9% and energy adding 0.5%. The price of oil settled up 0.8% at US$78.99 a barrel after U.S. oil storage data showed a larger-than-expected draw in crude stockpiles.
Stella-Jones was one of the top performers. Its shares climbed 10.9% after the forestry firm reported first-quarter results that beat analysts’ estimates.
On Wall Street, the Dow Jones Industrial Average ended higher, stretching its winning streak to six straight and closing above 39,000 points for the first time in five weeks, as investors kept betting on supportive U.S. monetary policy.
The other Wall Street benchmarks cooled a touch as momentum stalled and U.S. Treasury yields rose on the day of a 10-year notes auction. The S&P 500 ended unchanged after four sessions of gains, and the Nasdaq Composite slipped to a second consecutive decline.
There was not much news to move the indexes, outside of reports from individual companies.
“We’re just waiting for the next catalyst to jump-start the direction in the market, and we’re probably going to get that next week,” said Ameriprise Chief Market Strategist Anthony Saglimbene. The Producer Price Index (PPI) is due on May 14, and the Consumer Price Index (CPI) scheduled for May 15.
The S&P 500 has leveled off close to the 5,200 mark, which it last closed above on April 9. On Wednesday, it was hampered by sliding shares of Uber which posted a surprise quarterly loss and issued a downbeat forecast.
The ride-hailing platform fell 5.7%, was among the S&P 500′s biggest decliners, after it forecast second-quarter gross bookings would not meet expectations.
Tesla fell 1.7% after Reuters reported U.S. prosecutors were examining whether the company committed securities or wire fraud by misleading investors and consumers about self-driving capabilities of its electric vehicles.
Other megacap stocks such as Nvidia, Amazon and Alphabet slipped between 0.2% and 1.1%, as the 10-year Treasury yield edged up.
Rising yields helped dampen optimism spurred by a positive earnings season and softer-than-expected labour market data last week that had tempered concerns about the Federal Reserve keeping interest rates higher for longer.
Traders are pricing in a 67% chance of the Fed cutting rates by at least 25 basis points in September, according to the CMEGroup’s Fedwatch tool, up from about 54% a week ago.
Fed policymakers who spoke on Wednesday stayed consistent to recent messaging, including at the U.S. central bank’s policy meeting last week.
Boston President Susan Collins said the current setting of monetary policy will slow the economy in the way she believes will be necessary to get inflation back to the Fed’s 2% target.
The Dow Jones Industrial Average rose 172.13 points, or 0.44%, to 39,056.39, the S&P 500 lost 0.03 points, or 0.00%, to 5,187.67 and the Nasdaq Composite lost 29.80 points, or 0.18%, to 16,302.76.
Among S&P sectors, utilities rose 1.1%, extending its run of higher finishes to 14 out of the last 16 sessions, boosted as Vistra Corp jumped 9.1% after reporting strong earnings.
However, seven of the 11 sectors declined, with real estate , materials and consumer discretionary the worst performers.
Intel fell 2.2% after warning of a sales hit from the U.S. revoking some of the chipmaker’s export licenses for China.
Tripadvisor tumbled 28.7%, its largest ever one-day percentage drop, after the online travel agency ruled out a possible sale at this time and posted a surprise quarterly loss.
Uber rival Lyft climbed 7.1% after projecting higher-than-expected gross bookings and a core profit for the current quarter.
The S&P 500 posted 32 new 52-week highs and 3 new lows while the Nasdaq recorded 100 new highs and 83 new lows.
Reuters, Globe staff
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