S&P/TSX composite ekes out tiny gain, U.S. markets move lower Friday

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TORONTO — Canada's main stock index eked out a minute gain Friday with technology stocks weighing down the index, while U.S. markets moved lower.

The S&P/TSX composite index was up 2.01 points at 20,419.62.

In New York, the Dow Jones industrial average was down 8.89 points at 33,300.62.The S&P 500 index was down 6.54 points at 4,124.08, while the Nasdaq composite was down 43.76 points at 12,284.74.

“Looks like another week where the markets are staying in a tight range. We are seeing some downward pressure to close during the week, but nothing too dramatic,” said Angelo Kourkafas, senior investment strategist at Edward Jones.

That downward pressure, particularly on technology and growth stocks, is tied to a rise in yields, said Kourkafas.

The yields are on the way up after a University of Michigan consumer sentiment survey reported an unexpected rise in long-term inflation expectations, he said.

That plus ongoing uncertainty around the U.S. debt ceiling are weighing on markets, sending yields higher, said Kourkafas.

Debt ceiling headlines will likely continue to be the main focus next week, he said, with the June 1 deadline for a deal approaching.

"We might see a little more anxiety related to this issue," he said.

Other than the survey, which on a monthly basis can be relatively volatile, this week saw some encouraging economic news in employment and inflation out of the U.S., said Kourkafas. There’s one more round of each to be released before the Federal Reserve’s June meeting, but barring a dramatic shift, the central bank is almost surely going to pause interest rates, he said.

"We are in this mode where there's enough encouraging data, but at the same time, some headwinds ahead. So investors are cautious to move in either direction," said Kourkafas, adding that volatility could pick up in the weeks ahead.

Meanwhile, Canada will get its inflation data on Tuesday, providing another look into how the Bank of Canada’s fight against rising costs is faring after its own rate pause.

The Canadian dollar traded for 73.89 cents US compared with 74.20 cents US on Thursday.

The June crude contract was down 83 cents at US$70.04 per barrel and the June natural gas contract was up eight cents at US$2.27 per mmBTU.

The June gold contract was down 70 cents US at US$2,019.80 an ounce and the July copper contract was up two cents at US$3.73 a pound.

This report by The Canadian Press was first published May 12, 2023.

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

Rosa Saba, The Canadian Press