Tech Tumble Triggers Market Meltdown: US and Canada Feel the Heat

Last updated: November 19, 2023

Thursday, October 26, saw a slump in the stock market, with US markets taking a hit. The S&P/TSX composite index dropped 72.54 points, closing at 18,875.31. Meanwhile, the Dow Jones, S&P 500, and Nasdaq fell, with tech losses leading the way.

Tech Tumble Triggers Market Meltdown
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Philip Petursson, chief investment strategist at IG Wealth Management, dubbed it a “risk-off day.” He pointed to the impact of major US companies’ earnings reports.

Meta, Facebook’s parent company, and Alphabet both saw their stocks tumble despite beating profit estimates. Petursson noted that investors focus more on companies’ future outlooks than their current numbers.

“Meta and Alphabet revenues are driven by advertising, so any suggestion that those companies are expecting softer revenue going forward could spell a weaker economic outlook,” Petursson explained.

However, despite Thursday’s GDP report confirming confidence in the US economy, he also noted a decrease in risk appetite across the business market. With the US Federal Reserve’s next rate decision on the horizon, Petursson anticipates a steady hold but doesn’t rule out future hikes.

“In the next couple of meetings, they could say the U.S. economy can handle further rate increases to help drive inflation lower,” he said.

Meanwhile, in Canada, rate hikes seem unlikely. The Bank of Canada announced it was holding its key rate steady on Wednesday. The Canadian dollar traded for 72.33 cents US, a slight drop from Wednesday’s 72.56 cents US.

Oil prices also dipped in a continued display of volatility. Petursson highlighted the tug-of-war between supply-demand fundamentals pushing prices up and economic uncertainty and Middle East conflict pulling them down.

The December crude oil contract was down US$2.18 at US$83.21 per barrel, while the December natural gas contract was up 10 cents at US$3.48 per MMBtu. The December gold contract was up US$2.50 at US$1,997.40 an ounce, and the December copper contract was down a penny at US$3.58 a pound.

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