North American stock markets bounce back from three-day tech-led correction - InfoNews

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North American stock markets bounce back from three-day tech-led correction

September 09, 2020 - 1:57 PM

TORONTO - North American stock markets enjoyed a broadly based bounce-back midweek after a three-day correction driven by the technology sector.

All 11 sectors of the TSX were higher led by materials, consumer staples and technology.

"We had aggressive selling at the end of last week and yesterday, and today feels a bit more like a reversion bounce but there's not as much volume as some people would like to see," said Greg Taylor, chief investment officer of Purpose Investments.

He said it's going to be interesting to see how this plays out because some of the tech stocks were stretching valuations.

"So there's potential for more downside in the next few days but the bounce today looks pretty healthy," Taylor said in an interview.

He expects the fall is going to be a volatile period for stock markets.

Investors will be closely watching the U.S. election and whether colder weather will be accompanied by a second wave of the COVID-19 pandemic – and the impact of both events on the economy.

The economic rebound has largely been backstopped by fiscal and monetary stimulus, but what will happen as governments start to phase out support is up for debate.

"Is there still going to be enough underlying strength to keep the economy going?" Taylor wonders.

"The market is probably a little more at risk of some selling in the next few months , but definitely some volatility will occur."

The S&P/TSX composite index closed up 284.08 points or nearly 1.8 per cent at 16,346.14.

In New York, the Dow Jones industrial average was up 439.58 points at 27,940.47. The S&P 500 index gained 67.12 points at 3,398.96, while the Nasdaq composite was up 293.87 points or 2.7 per cent at 11,141.56.66. The tech-heavy market is down 7.6 per cent from the Sept. 2 record high but still up 24 per cent year-to-date.

The market moves came despite AstraZeneca suspending final testing of its potential COVID-19 vaccine while it investigates a volunteer's illness.

Taylor said bad news on the vaccine front tends to result in moves to large-cap tech stocks. So bad news is good for tech stocks with not much else to provide the bounce.

"Overall, it just feels more than anything as a technical oversold bounce we're getting in the market today."

The Canadian dollar traded for 75.91 cents US compared with 75.81 cents US on Tuesday.

Materials gained 3.7 per cent on higher metals prices as shares of Ivanhoe Mines Ltd. rose 8.1 per cent and Kinross Gold Corp. were up 6.45 per cent.

The December gold contract was up US$11.70 at US$1,954.90 an ounce and the December copper contract was up 2.65 cents at US$3.05 a pound.

Alimentation Couche-Tard Inc. shares increased five per cent to push up consumer staples while technology climbed 2.4 per cent.

Energy was higher on a recovery in oil prices after Tuesday's steep decline.

The October crude contract was up US$1.29 at US$38.05 per barrel and the October natural gas contract was up 0.6 of a cent at nearly US$2.41 per mmBTU.

This report by The Canadian Press was first published Sept. 9, 2020.

Companies in this story: (TSX:IVN, TSX:K, TSX:ATD.B, TSX:GSPTSE, TSX:CADUSD=X)

News from © The Canadian Press, 2020
The Canadian Press

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