TORONTO — Canada's main stock index fell for the first time in February as frenzied buying in the cannabis sector strongly reversed course.
The S&P/TSX composite index slipped for the first time in nine sessions and closed down 64.79 points to 18,392.99.
In New York, the Dow Jones industrial average was down 7.10 points at 31,430.70. The S&P 500 index was up 6.50 points at 3,916.38, while the Nasdaq composite was up 53.24 points at 14,025.77.
Health care was responsible for almost the entire movement of the TSX lower as cannabis companies saw large drops in their share prices after recent gains.
"You're seeing a real massive momentum unwind in the marijuana names today," said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
The sector lost 17.4 per cent Thursday, with Aphria Inc. down 36 per cent, Aurora Cannabis Inc. 23.6 per cent, Cronos Group Inc. 22.1 per cent and Canopy Growth Corp. 22 per cent.
In the U.S., Tilray was down nearly 50 per cent.
Cannabis names had soared on anticipation of federal legalization in the U.S., the merger of Tilray and Aphria and interest from retail investors who had caused wild swings for GameStop, BlackBerry Ltd. and silver.
"The last couple of days have just been euphoric buying," Archibald said in an interview.
He noted that a lot of these cannabis names have been promoted on social media sites like Reddit.
Timing these very fast money trades is challenging especially for Canadian companies because of difficulties facing the domestic marketplace, Archibald said.
"So you see these kind of euphoric moves and it's not uncommon to see this kind of sharp correction in these names."
He said the TSX would be essentially flat for the day if it wasn't for the health-care pullback.
Materials and energy were also lower as crude oil and gold prices decreased.
Materials lost 1.2 per cent as the April gold contract was down US$15.90 at US$1,826.80 an ounce. The March copper contract was down 0.1 cent at US$3.77 a pound.
Energy slipped as crude prices fell after climbing for eight straight days.
The March crude oil contract was down 44 cents at US$58.24 per barrel and the March natural gas contract was down 4.3 cents at US$2.87 per mmBTU.
"It's been a really strong start to the month, so it stands to reason that we would see a little bit of profit-taking with respect to the commodity and obviously when the energy commodity is down, generally the equities follow suit."
Energy slipped even though some large deals pushed some participating company shares higher.
Inter Pipeline shares jumped by as much as 34 per cent following a proposed hostile takeover by its largest shareholder, Brookfield Infrastructure Partners LP.
Investors also applauded with higher stock prices for both Arc Resources Ltd. and Seven Generations Energy Ltd. following the announcement of an oilpatch marriage one analyst described as "a merger of high-quality equals."
Arc shares rose 4.8 per cent while Seven Generations was up 5.7 per cent. Meanwhile, Vermilion Energy Inc. and MEG Energy Corp. were down 3.6 and 3.2 per cent, respectively.
"It's nice to see some action happening in the energy space because we know how challenging it's been in the last several years," said Archibald.
The Canadian dollar traded for 78.83 cents US compared with 78.81 cents US on Wednesday.
A series of strong quarterly results moved the financials and real estate sectors higher with shares of Brookfield Asset Management, Manulife Financial, Sun Life Financial and Colliers International all gaining ground on the day.
This report by The Canadian Press was first published Feb. 11, 2021.
Companies in this story: (TSX:BAM, TSX:MFC, TSX:XLF, TSX:VET, TSX:MEG, TSX:VII, TSX:ARZ, TSX:APHA, TSX:WEED, TSX:ACB, TSX:CRON, TSX:CIGI, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press