Shooting at Michigan splash pad leaves 'nine, maybe 10 victims': authorities
Gunfire erupted at a splash pad in the Detroit suburb of Rochester Hills, leaving as many as 10 people wounded, authorities said.
Canada's main stock index extended its broad-based sell-off into a fifth straight day Thursday, as recessionary fears mounted and global commodity prices slumped.
The S&P/TSX composite index closed down 188.09 points at 19,142.72.
In New York, the Dow Jones industrial average was up 145.99 points at 31,656.42. The S&P 500 index was up 11.85 points at 3,966.85, while the Nasdaq composite was down 31.08 points at 11,785.13.
The TSX has been on a losing streak since last week, wiping out much of the gains that had been made in July and early August. While the turning point was a seven-minute speech last Friday in Jackson Hole, Wyo. by U.S. Federal Reserve Chair Jerome Powell - in which he indicated the central bank will likely need to keep interest rates high for some time in order to bring inflation down - by Thursday, the market decline appeared to be generating its own momentum.
“I always talk about the path of least resistance,” said Allan Small, senior investment adviser at IA Private Wealth.
“On a day when there isn't really a lot of negative economic data or negative news, the market still goes down because it has a negative overtone to it. Right now, the path of least resistance is to the downside.”
Investors have been worried that overly aggressive central bankers could raise interest rates to high and tilt the economy into a full-fledged recession. Higher interest rates also hurt investment prices, especially for pricier stocks like technology companies.
Stocks rallied this summer as investors began to hope that the U.S. Fed might reverse some of its already instituted rate hikes as early as next year, but Powell's Jackson Hole speech dashed those hopes. The market is now pricing in the likelihood of a 75-basis-point increase by the U.S. central bank at its meeting later this month.
Here in Canada, investors are bracing for a likely 75-basis-point hike by the Bank of Canada next week. That, and fears of recession, dragged down bank stocks Thursday, with the S&P/TSX capped financials index down 0.67 per cent on the day.
Another factor weighing on the TSX is the significant decline in crude oil prices this week, with the benchmark West Texas Intermediate now trading at levels not seen since late January, before the Russian invasion of Ukraine sent energy prices soaring. The October crude contract was down US$2.94 at US$86.61 per barrel on Thursday, as lockdowns in China and fears of global economic slowdown weighed on oil demand.
“The price of oil has played a huge part in the run-up of inflation, on both sides of the border,” Small said. “You can probably surmise that if oil hadn't gone up 15 per cent, inflation probably wouldn't have gone up 15 per cent.”
“Now the price of oil is down, the `war premium' has pretty much come out of the market ... and the question is, can we go lower? If we do, the TSX will be in tough,” he added.
Even the price of gold, which typically rises when investors are jittery and seeking safety, fell to its lowest point since late July. Small said the mix of inflation combined with low economic growth - or 'stagflation' - is leaving investors with nowhere to hide.
“Commodities are down right across the board. You name it, anything we pull out of the ground is down from a few months ago,” he said.
The December gold contract was down US$16.90 at US$1,709.30 an ounce and the December copper contract was down 11 cents at US$3.41 a pound.
Small said many investors will be watching for the next round of monthly jobs data, which is expected to be released for both Canada and the U.S. on Friday. In a “what's good is bad” twist, if the statistics show high levels of employment and a lot of job vacancies, that will likely be viewed by central bankers as further evidence of economic overheating and another justification for rate hikes.
Still, in spite of the prevailing gloomy sentiment, Small said it's important to remember that this market slump could easily reverse itself.
“It's very possible to jump out of this very quickly,” he said. “If the market gets even a whiff of an idea, it doesn't even have to come true at this point, that the Fed will slow interest rates down ... the market could rally very quickly.”
This report by The Canadian Press was first published Sept. 1, 2022.
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