S&P/TSX composite down, U.S. markets mixed following shaky day for bond yields

TORONTO — Most North American stocks dropped Wednesday on what was a volatile day for bond yields, with Canada's main stock index dipping alongside lower oil prices.

Mike Archibald, vice-president and portfolio manager with AGF Investments Inc., said the day started with U.S. 10-year bond yields dropping to their lowest level since February, then reversing after comments from the U.S. Federal Reserve on its readiness to taper stimulus measures and increase interest rates in 2023 if the economy continues to grow.

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"I don’t think that this is necessarily new information per se, but ... this came as a bit of a surprise and added to some of the volatility," said Archibald.

The 10-year U.S. bond rate benchmark sat at 1.185 per cent Wednesday evening, after dipping as low as 1.127 per cent in the morning (bond yields move in the opposite direction to prices).

The swing in bond yields meant gold prices started the day strong as haven investments became more attractive but the metal eventually lost ground, with the December gold contract finishing the day up 40 cents at US$1,814.50 an ounce

Oil prices also fell notably today, with the September crude oil contract down US$2.41 at US$67.79 per barrel and the September natural gas contract up 13.1 cents at US$4.16 per mmBTU. The Canadian dollar remained unchanged today at 79.71 cents US.

As a result, the TSX’s energy index weighed heavily on Canada’s main stock exchange, down 4.11 per cent to 120.20 points.

The S&P/TSX composite index was down 36.12 points at 20,329.73.

In New York, the Dow Jones industrial average was down 323.73 points at 34,792.67. The S&P 500 index was down 20.49 points at 4,402.66, while the Nasdaq composite was up 19.23 points at 14,780.53.

Second quarter earnings reports continued to affect trading Wednesday, with Sleep Country Canada Holdings Inc. up 15.47 per cent after beating expectations. Archibald said it was the TSX’s top performing stock of the day.

Archibald said Winnipeg-based bus manufacturer NFI Group also had a strong day following their positive earnings, finishing up 9.15 per cent for the day.

Looking ahead, Archibald said there are a number of major Canadian companies slated to release their earnings reports in the next 24 hours, including BCE Inc., Pembina Pipeline Corp., Sun Life Financials Inc. and Manulife Financial Corp.

"Tomorrow is the biggest earnings day of the week," said Archibald.

"We should get some more clarity on what the picture will be like moving forward."

Meanwhile in the U.S., Robinhood Markets Inc., became the latest stock to skyrocket as a so-called meme stock fuelled by online speculation.

The trading app's stock shot up to US$70.39, an increase of 50.41 per cent for the day and an increase of 90.50 per cent over the last five days.

This report by The Canadian Press was first published Aug. 4, 2021.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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