S&P/TSX composite falls amid bank losses, U.S. stocks tumble as yields rise

A sign board displays the TSX as women walk past the Richmond Adelaide Centre in the financial district in Toronto on Wednesday, Sept. 29, 2021. THE CANADIAN PRESS/Evan Buhler

Canada’s main stock index finished more than 280 points lower on Monday amid losses in bank stocks, while U.S. stock markets also fell.

Allan Small, senior investment adviser at iA Private Wealth, said that markets took a “break” last week from negativity and instead focused on U.S. retail sales and the health of consumers.

“The consumer was strong, and the markets rode that positive wave that we tend to see during a shortened Thanksgiving week. But today … Dec. 1, and it looks like we’re starting the month on a bit of a negative note,” he said.

In the Canadian market, Small said some of the nation’s biggest lenders were “taking it on the chin.”

Canada’s big banks will report their fourth-quarter results this week, starting with Scotiabank on Tuesday, followed by Royal Bank of Canada and National Bank of Canada on Wednesday. Bank of Montreal, CIBC and Toronto-Dominion Bank are expected to report their results on Thursday.

Small said that while he is expecting positive results from Canada’s major banks this week, they are reporting earnings with some trading at all-time highs. He said that Canadian bank stocks have done phenomenally well over the past three to six months.

“To beat a high bar, you’re going to have to really impress the investors in the market. I’m concerned a little bit that we could see a bit of a pullback … maybe today is the start of that,” Small said.

The S&P/TSX composite index was down 281.00 points at 31,101.78.

In New York, the Dow Jones industrial average was down 427.09 points at 47,289.33. The S&P 500 index was down 36.46 points at 6,812.63, while the Nasdaq composite was down 89.76 points at 23,275.92.

U.S. stocks gave back some of last week’s rally, as bitcoin fell again on Monday.

Last week’s rally was largely due to rising hopes that the U.S. Federal Reserve will cut its main interest rate next week to help shore up the slowing job market. Such hopes are still high, with traders betting on a roughly 85 per cent chance the Fed will cut at its next meeting, according to data from CME Group.

But yields for longer-term Treasurys nevertheless rose in the bond market Monday. It was part of a worldwide climb for yields after the head of the Bank of Japan hinted at a possible hike to interest rates there.

When bonds are paying higher yields, they can attract investors who would otherwise buy stocks or cryptocurrencies. Higher yields undercut prices for all kinds of investments, particularly those seen as the most expensive.

“Even if yields were to rise for a few days, maybe that would be a bit of a stumbling block for the markets in general. But I think those things tend to be shorter-lived, especially if the Fed’s not raising rates,” Small said.

The Canadian dollar traded for 71.54 cents US, flat compared with Friday’s trading session.

The January crude oil contract was up 77 cents US at US$59.32 per barrel. The February gold contract was up US$19.90 at US$4,274.80 an ounce.

This report by The Canadian Press was first published Dec. 1, 2025.