S&P/TSX Composite Drops Over 300 Points Amid U.S. Market Declines

Rosa Saba, The Canadian Press

TORONTO — On Friday, Canada’s main stock index saw a significant drop of over 300 points, closing down by 305.63 points at 24,767.73. Notably, this decline occurred despite strong performance in energy stocks following a rise in oil prices. U.S. stock markets echoed this downward trend, affected by recent labor market reports.

In New York, the Dow Jones Industrial Average fell sharply, closing down 696.75 points at 41,938.45. The Nasdaq Composite was down by 317.25 points at 19,161.63, while the S&P 500 index decreased by 91.21 points, finishing at 5,827.04.

The latest labor market data released for both Canada and the U.S. exceeded expectations but had differing impacts on the markets. Canada reported an addition of 91,000 jobs in December, with the unemployment rate decreasing to 6.7 percent. This positive news suggests some stability in the job market; however, investment advisor Ilana Schonwetter from Blueshore Financial noted that the Bank of Canada will likely require more than a single month of improvement to ascertain a trend. The Bank has been aggressively lowering interest rates in response to a faltering economy and labor market, with further cuts anticipated in 2025.

Despite the unexpectedly good news surrounding Canadian jobs, the markets were largely influenced by movements in U.S. stocks. In the United States, job growth also showed positive results, with a rise in employment reported for December and a drop in the unemployment rate to 4.1 percent. However, this stronger-than-expected data could be perceived negatively, as it suggests that the U.S. Federal Reserve may feel less pressured to reduce interest rates further, leading to a sell-off among investors concerned about future cuts.

"The core around the sell-off today is really surrounding that jobs report, and the consequences it brings to the Federal Reserve's decisions," said Schonwetter. She emphasized the divergence expected between Canadian and U.S. economic policies moving forward, noting that the Bank of Canada is in a more challenging position due to the high levels of debt among Canadians, upcoming mortgage renewals, and various economic uncertainties.

In terms of currency performance, the Canadian dollar traded at 69.34 cents per U.S. dollar, slightly lower than the previous day's 69.47 cents. Commodity prices showed mixed results, with the February crude oil contract increasing by $2.65 to reach $76.57 per barrel, while the February natural gas contract gained 29 cents, settling at $3.99 per mmBTU. The February gold contract rose by $24.20 to close at $2,715 an ounce, whereas the March copper contract saw a minor decline of one cent, finishing at $4.30 per pound.

— With files from The Associated Press

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