TORONTO — North American stock markets rebounded strongly late Monday afternoon after plunging earlier in the session amid concerns over central bank decisions and geopolitical risks in Ukraine.
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The Toronto Stock Exchange’s S&P/TSX Composite Index closed down 50.09 points at 20,571.30, but was down more than 700 points earlier in the session.
At its trough on Monday, the Toronto floor showed a decline of 7.6% from its most recent peak, which represented its worst fall since the start of the pandemic.
The situation was even worse in the United States, where the three largest markets technically corrected, retreating at least 10% from their recent highs. The Nasdaq benchmark index even lost 19.2% while the S&P 500 posted a drop of 12.4%.
However, all three major indices rebounded to end the day higher. The Dow Jones industrial average ended the session with a gain of 99.13 points to 34,364.50 points. The broader S&P 500 index grabbed 12.19 points to 4,410.13 points, while the Nasdaq Composite Index rose 86.21 points to 13,855.13 points.
Ahead of the late rally, investment strategist Angelo Kourkafas of the firm Edward Jones described the day as a “sudden flash”.
“We saw some pretty indiscriminate selling and some panic, which is usually the type of condition that marks a short-term bottom or support. We’ll see if that happens,” he said in an interview.
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Investment sentiment has deteriorated in recent months in anticipation of a policy shift by central banks towards monetary tightening and interest rate hikes to fight inflation, after using stimulus measures to combat the effects of the COVID-19 pandemic.
The US Federal Reserve and the Bank of Canada are expected to unveil at least part of their plan in this regard on Wednesday.
The first catalyst on Monday was geopolitical uncertainty after the US State Department ordered the families of American staff at the US embassy in Ukraine to leave the country.
While corporate financial results for the fourth quarter have so far generally exceeded expectations, concerns about margins and the outlook, first by U.S. banks, have introduced some caution that profitability will be affected by labor and other expenses, Kourkafas explained.
All 11 sectors on the TSX were down for most of the day, but the Information Technology, Consumer Staples, Consumer Discretionary and Healthcare sectors still ended Monday’s session higher. positive note.
The technology sector advanced 1.8%. The energy group for its part suffered the biggest setback, retreating 1.5%.
On the New York Commodity Exchange, crude oil fell US$1.83 to US$83.31 a barrel and natural gas was up US9.3 cents to US$3.88 million BTUs.
The price of gold rose $9.90 to US$1841.70 an ounce and that of copper slipped 11.2 cents US to US$4.41 a pound.
In the currency market, the Canadian dollar traded at an average rate of 79.01 cents US, down from 79.71 cents US on Friday.
The Canadian Press