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TORONTO — Canada’s main stock index plunged on Thursday, while U.S. markets also lost ground amid a defensive rotation.
Philip Petursson, chief investment strategist at IG Wealth Management, said that a risk-off sentiment prevailed during Thursday’s trading session.
“Investors are taking money off the table right now. We’ll see how long this lasts, but that, I would say, is the story of the day,” he said.
The S&P/TSX composite index was down 576.95 points at 31,994.60.
In New York, the Dow Jones industrial average was down 592.58 points at 48,908.72. The S&P 500 index was down 84.32 points at 6,798.40, while the Nasdaq composite was down 363.99 points at 22,540.59.
Losses in the basic materials sector weighed on the TSX.
Gold’s price fell 1.2 per cent and has been careening back and forth since roughly doubling in price over 12 months. It neared US$5,600 last week and then fell below US$4,500 on Monday.
On Thursday, the April gold contract was down US$61.30 at US$4,889.50 an ounce.
Both gold and silver had been screaming higher as investors piled into places they thought would be safer amid worries about political turmoil, a U.S. stock market that critics called expensive and huge debt loads for governments worldwide. But nothing can keep rising at such extreme rates forever, and some had been calling for a pullback.
Canadian investors also sifted through a slew of corporate earnings. Generally speaking, Petursson said results have been positive, but expectations are high.
“Even companies that have surprised to the upside, if you meet, you don’t necessarily get rewarded. If you beat, you do not necessarily get rewarded,” he said.
“You only get rewarded if you beat by a lot, because that bar was set quite high.”
Among other names, BCE Inc. and Thomson Reuters both reported fourth-quarter earnings. Shares for those companies lost 2.56 per cent and 5.41 per cent, respectively.
Sharp drops for big technology companies yanked the U.S. market lower.
Alphabet dragged on the market and slipped 0.5 per cent, after paring an earlier loss of eight per cent, even though the parent company of Google, YouTube and other businesses reported a stronger profit for the latest quarter than analysts expected. Investors focused instead on how much Alphabet is spending on artificial-intelligence technology and questioned whether it will all prove worth it.
“The big surprise was the amount being spent on AI capex. It was far greater than what the market had originally thought,” Petursson said.
Alphabet said its spending on equipment and other investments could double this year to roughly US$180 billion. That blew past analysts’ expectations of less than US$119 billion, according to FactSet.
