TORONTO — Major North American indexes fell slightly Wednesday on a quiet trading day as investors wait to see if the recent strength in technology stocks can broaden to other sectors, and what economic repercussions may come from a second wave of the COVID-19 virus.
"We're in August. The markets are generally really thin in August," said Greg Taylor, chief investment officer of Purpose Investments, of the low trading volume.
The S&P/TSX composite index retreated 48.68 points to 16,577.38 — a 0.29 per cent move.
The major U.S. indexes also had moves of less than one per cent. In New York, the Dow Jones industrial average fell 85.19 points to 27,692.88. The S&P 500 index shed 14.93 points to 3,374.85 — the day after it recorded a new all-time closing high of 3,389.78.
The Nasdaq composite, meanwhile, lost 64.38 points to 11,146.46.
Markets have had a really good run over the past four months or so, Taylor said, climbing back from the lows seen in February and March when the the COVID-19 pandemic took hold.
"People are just trying to figure out what's next," he said.
Technology stocks in particular have driven the rally, noted Taylor. Apple, for example, became the first U.S. company to record a market value of US$2 trillion with the company's shares gaining nearly 60 per cent so far this year.
Investors are waiting to see if that trajectory will broaden out to other sectors, such as financials, energy or materials, he said.
"That's really what everyone's hoping will be the next phase of the bull market."
The caveat to that, he said, is ongoing concern around a second wave of COVID-19 cases and whether that will slow global growth. Additionally, ongoing delays on a coronavirus relief package from the U.S. government could leave a negative mark on the country's economic growth, and markets are starting to price in the potential of an American presidential election that drags beyond November should there be any debate around the result.
On the TSX, the materials sector, which includes mining companies, dragged down the index, with the sector down almost two per cent and the wors performer of the day.
That drop came as the price of the precious metal fell. The December gold contract lost US$42.80 to US$1,970.30 an ounce, pulling back from recent highs over the $2,000 mark.
Investors will be watching for the Canadian banks to start reporting quarterly earnings next week with RBC, TD, CIBC, BMO and Scotiabank all set to release their latest quarterly earnings starting Tuesday.
"That's going to be the next big move for the TSX, to see if the banks can put up some good numbers."
The Canadian dollar traded for 75.92 cents US compared with 75.93 cents US on Tuesday.
The October crude contract fell a penny to US$43.11 per barrel and the September natural gas contract gained about a penny at nearly US$2.43 per mmBTU. The September copper contract gained nearly five cents to US$3.02 a pound.
— With a file from The Associated Press
This report by The Canadian Press was first published Aug. 19, 2020.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press