North American stock markets lose ground as investors take profits from recent highs

·4 min read

TORONTO — North American stock markets slumped from recent highs as investors pocketed some profits in stronger sectors.

The S&P/TSX composite index closed down for a second straight day, losing 100.71 points to 18,274.07. Despite the dip, the Toronto market is up 5.4 per cent this month.

In New York, the Dow Jones industrial average was down 119.68 points at 31,493.34. The S&P 500 index was down 17.36 points at 3,913.97, while the Nasdaq composite was down 100.14 points at 13,865.36.

"Overall we're pretty much down in tandem with the markets in the States today, which actually is fairly impressive considering that crude oil is down," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

He said a lot of the high-flying sectors of late are taking a hit with some tech names, marijuana stocks and clean energy companies such as Ballard Power Systems Inc. losing some ground.

"What we're seeing is that it's more of a general market correction where news flow has kind of run out and so people are just starting out to take some profits," he said in an interview.

"We're kind of in this holding pattern where nobody really knows which way to take it."

The heavyweight financials was the lone sector on the TSX to rise Thursday. Royal Bank of Canada shares climbed 1.6 per cent on strong bond yields that are a sign of an improving economy and which help banks make money.

The movement higher of some bank stocks could be the result of investors anticipating decent results when they report quarter results next week, said Cieszynski.

Utilities was unchanged while nine of the 11 major sectors on the TSX were lower led by health care, energy, materials, industrials and consumer discretionary.

Losses by cannabis names pushed health care down 5.6 per cent as Canopy Growth Corp. lost 10.3 per cent, Aurora Cannabis Inc. eight per cent, Aphria Inc. 6.7 per cent and Cronos Group Inc. 6.2 per cent.

Energy dropped 1.2 per cent even though Crescent Point Energy Corp. got a big boost, with its shares rising 10.5 per cent in trading after announcing the acquisition of light oil shale assets from Royal Dutch Shell for $900 million.

Among the losers on the day were Vermilion Energy Corp., whose shares were down 4.5 per cent.

The sector's dropoff came as crude oil prices fell despite cold winter weather that caused supply disruptions in the U.S. south.

The April crude oil contract was down 63 cents at US$60.53 per barrel and the April natural gas contract was down 6.2 cents at US$2.97 per mmBTU.

Crude climbed earlier in the day to a high of US$62.29 on a bigger drawdown of U.S. stockpiles.

The Canadian dollar traded for 78.76 cents US compared with 78.67 cents US on Wednesday.

Materials lost about one percentage point despite higher metals prices.

The April gold contract was up US$2.20 at US$1,775.00 an ounce and the March copper contract was up eight cents at US$3.90 a pound.

Consumer discretionary decreased with auto parts manufacturers Linamar Corp., Martinrea International Inc. and Magna International Inc. each off about 3.5 per cent.

Canadian Tire shares were almost flat despite reporting strong quarterly results, while Walmart shares were down in the U.S. after the retailer signalled in its quarterly results it expected slowing sales to come.

Also contributing to market softness were weaker jobs numbers on both sides of the border.

Canada lost 231,200 non-farm jobs in January, the largest decrease since May last year, said payroll services provider ADP.

And the number of first-time U.S. jobless claims rose to 861,000 as many businesses were closed due coronavirus lockdowns.

The jobless numbers aren't surprising given the latest wave of lockdowns, said Cieszynski.

"Yes it's disappointing but in context of where we were at (a year ago), it's not that bad."

This report by The Canadian Press was first published Feb. 18, 2021.

Companies in this story: (TSX:VET, TSX:CPG, TSX:LNR, TSX:MRE, TSX:MG, TSX:RY, TSX:WEED, TSX: ACB, TSX:APHA, TSX:CRON, TSX:BLDP, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press