TORONTO — North American stock markets were relatively flat Tuesday as investors eagerly await the start of third-quarter earnings reports and the latest monthly inflation numbers.
The third quarter earnings season gets underway Wednesday with some U.S. banks. While overall results are expected to be higher, investors are watching for commentary on the impact of higher energy prices and supply chain issues.
"To me, the markets, whether it's Canada, the U.S., are just in a wait-and-see-approach, as they gather data," said Anish Chopra, managing director with Portfolio Management Corp.
The executive assessments could give investors a glimpse into fourth quarter earnings, Chopra said in an interview.
"Are supply chain issues going to have an impact on the company's ability to produce goods and therefore they'll struggle to make their sales forecast in Q4."
The U.S. will also report inflation numbers for September that could dictate how quickly the U.S. Federal Reserve begins to taper stimulus by reducing bond purchases.
The International Monetary Fund slightly downgraded its outlook for the global recovery from the pandemic recession, reflecting the persistence of supply chain disruptions in industrialized countries and deadly disparities in vaccination rates between rich and poor nations.
In its latest World Economic Outlook being released Tuesday, the IMF foresees global growth this year of 5.9 per cent, compared with its projection in July of six per cent.
Chopra said the revision is certainly a negative, but added, "I think investors have already started to downgrade growth forecasts simply because of supply chain issues and higher inflation."
The S&P/TSX composite index closed up 20.81 points to 20,437.12.
In New York, the Dow Jones industrial average was down 117.72 points at 34,378.34. The S&P 500 index was down 10.54 points at 4,350.65, while the Nasdaq composite was down 20.27 points at 14,465.93.
Materials and utilities led the TSX higher.
The sector comprising metal, forestry and fertilizer companies increased 1.5 per cent as the price of gold inched higher, with shares of Lithium Americas Corp. surging 17.7 per cent and New Gold Inc. up 8.6 per cent.
The December gold contract was up US$3.60 at US$1,759.30 an ounce and the December copper contract was down 4.1 cents at US$4.33 a pound.
"With higher Inflation numbers there is the potential that investors go back to looking at gold as an inflation hedge," Chopra said. "There may be some investors who are concerned and want to take some risk off, in which case they would go to the utilities area."
Utilities were up 1.1 per cent, led by Innergex Renewable Energy Inc., which rose 8.4 per cent.
Energy fell slightly despite higher crude oil and natural gas prices as Arc Resources Ltd. decreased 3.4 per cent and Crescent Point Energy Corp. was down 3.3 per cent.
The November crude contract was up 12 cents at US$80.64 per barrel after reaching an intraday high of US$81.62 and the November natural gas contract was up 16 cents at US$5.51 per mmBTU.
The Canadian dollar traded for 80.25 cents US compared with 80.12 cents US on Friday.
Consumer discretionary lost 0.7 per cent even though shares of Dorel Industrials Inc. more than doubled to $21.09 after the Montreal-based company announced the sales of its sports division for US$81 million.
This report by The Canadian Press was first published Oct. 12, 2021.
— With files from The Associated Press
Companies in this story: (TSX:DII.B, TSX:CPG, TSX:ARX, TSX:INE, TSX:LAC, TSX:NGD, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press