Canada's main stock index took a breather Friday, closing down more than 100 points a day after setting a new all-time closing high.
The S&P/TSX composite index closed down 103.18 points at 21,984.08.
On Thursday, it closed at 22,087.26, beating a previous record of 22,087.22 set in March 2022.
Ashish Utarid, assistant vice-president of investment strategy with IG Wealth Management, pointed out some sectors saw slight gains while others saw losses Friday. Trading volumes were also significantly lower than previously in the week.
"It's almost like everyone has been liking the rally for the last few weeks, and now they're taking the day off," Utarid said of the day's quieter trading session.
On Wall Street, U.S. stocks closed what has been the best week of the year so far with a quiet finish. The Dow Jones industrial average closed down 305.47 points at 39,475.90. The S&P 500 index was down 7.35 points at 5,234.18 a day after setting a new all-time closing high, while the Nasdaq composite was up 26.98 points at 16,428.82 to add to its record.
There was some volatility in late-day trading as Nike dragged on the market after falling 6.9 per cent. It reported stronger results for the latest quarter than analysts expected, but it's in the middle of several fundamental changes to inject more "newness" into its shoes and other products to make them more popular.
Canadian company Lululemon Athletica also sank 15.8 per cent Friday, in spite of a better-than-expected profit report.
"We don't really know yet whether this is brand or trend-specific," Utarid said.
"It could be indicative of some weakness in the retail sector ... but it could be more people are going to the office, they don't need as many lounge pants that they needed when they were home."
Before Friday's subdued session, markets had been buoyant in the wake of Wednesday's interest rate decision by the U.S. Federal Reserve, which indicated it still could cut rates three times this years.
"In the U.S., their next move is likely a cut. We just can't predict when. It could be late summer, maybe even early fall for the Fed," Utarid said.
"And on the Canada side, it could be as early as June or July."
Investors had been concerned that recent economic data pointing to hotter-than-expected inflation south of the border could convince the Fed to take rate cuts off the table. The recent rally by markets is equivalent to a sigh of relief by investors who have been afraid the economy will take a dive if interest rates stay high for too long.
But Utarid pointed out Friday that the strong performance of stocks so far this year is not solely due to expectations of coming rate cuts.
"We've set expectations for an entire generation of investors for the last 10 years that when interest rates go down, stocks will go up, but they can go up for other reasons, right?" he said.
"The companies (today) are much leaner. They're more productive, they're more profitable, they're expanding into new markets. They're also hopefully shedding debt. And that's the current story of where the equity markets are at."
The Canadian dollar traded for 73.57 cents US compared with 73.94 cents US on Thursday.
The May crude oil contract was down 44 cents at US$80.63 per barrel and the May natural gas contract was down two cents at US$1.81 per mmBTU.
The April gold contract was down US$24.70 at US$2,160 an ounce and the May copper contract was down five cents at US$4.01 a pound.
This report by The Canadian Press was first published March 22, 2024.
— With files from The Associated Press
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Amanda Stephenson, The Canadian Press
