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Wall Street retreated on Friday, heading into the weekend with a broad sell-off due to weak earnings, surging coronavirus cases and geopolitical uncertainties. The TSX was also lower, although losses were more modest thanks to a rally in gold stocks as bullion pushed through US$1,900 an ounce.
The S&P/TSX Composite index closed down 21.59 points, or 0.13%, at 15,997.06. All the major sectors were lower, except for gold-stock heavy materials, which gained 2.05%. Several precious metals miners, including Agnico Eagle Mines, gained 4% or more. But it was Sierra Wireless that was a true standout on the TSX, rallying nearly 18% after agreeing to divest its China-based automotive embedded module product line for US$165-million in cash.
For the second day in a row, the tech sector weighed heaviest on all three major U.S. stock averages. Intel Corp led the decline, its shares plunging 16.2% after the chipmaker reported a delay in production of a smaller, faster 7-nonometer chip.
“There’s a skittishness ahead of the weekend after yesterday’s tech and growth sell-off,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
“It’s been an unbelievable ride for the Nasdaq and tech over the last two moths,” Detrick added. “A well-deserved correction makes a lot of sense in our view.”
Each index – including the TSX – posted a weekly loss, with the S&P 500 and the Dow snapping three-week winning streaks. Nasdaq had its weakest week of the last four.
The retreat followed a rally that brought the S&P 500 to nearly 5% below its record high reached in February. The bellwether index is now near break-even for the year, while the Nasdaq has gained more than 15% year-to-date.
“With the rally we’ve seen so far in July, it makes sense to see anxiety ahead of a huge earnings week, the Fed decision and what’s likely to be the worst GDP in our lifetimes,” Detrick added.
Momentum stocks Apple, Alphabet Inc and Amazon.com are scheduled to post results on July 30, the day the U.S. Commerce Department is due to give its first take on second-quarter GDP. Analysts project that the economy dropped by a bruising 35% during the three-month period.
More than 1,000 Americans died from COVID-19 on Thursday, the third straight day for that grim milestone as total cases surged past 4 million.
Beijing fired back at Washington shuttering China’s Houston consulate by closing the U.S. consulate in the city of Chengdu.
The Dow Jones Industrial Average fell 182.44 points, or 0.68%, to 26,469.89, the S&P 500 lost 20.03 points, or 0.62%, to 3,215.63 and the Nasdaq Composite dropped 98.24 points, or 0.94%, to 10,363.18.
Of the 11 major sectors in the S&P 500, all but consumer discretionary closed in the red. Tech was the biggest percentage loser.
Healthcare lost ground, dropping 1.1% ahead of executive orders by President Donald Trump aimed at lowering drug prices.
Second-quarter earnings season charges ahead, with 128 constituents of the S&P 500 having reported. Of those, 80.5% have cleared a very low bar of analyst expectations.
American Express Co fell 1.4% after reporting an 85% slump in quarterly profit after setting aside nearly $628 million to cover potential defaults.
Verizon Communications Inc’s beat analyst profit and revenue estimates as the telecom saw strong demand due to stay-at-home mandates, boosting its shares by 1.8%.
Honeywell International Inc’s cost-cutting efforts resulted in better-than-expected second-quarter profit, but cautioned of many unknowns going forward. Its shares dropped 2.8%.
Intel rival Advanced Micro Devices Inc jumped 16.5%.
Tesla Inc extended Thursday’s losses, falling 6.3%.
Safe-haven gold pierced the $1,900 per ounce ceiling for the first time since 2011 as the worsening U.S.-China row added to fears over the hit to a global economy already reeling from the coronavirus pandemic.
Spot gold climbed 0.7% to $1,899.68 per ounce by 2:00 p.m. EDT (1800 GMT), after hitting $1,905.99, the highest since September 2011.
Prices gained 5% for the week, their best since week ended March 27. U.S. gold futures settled up 0.4% at $1,897.5.
“The only thing I can see to take the wind out of gold’s sails is the rapid development of a coronavirus vaccine, because until that happens, all this uncertainty (in markets) will stay with us,” said StoneX analyst Rhona O’Connell.
Non-yielding gold has surged over 25% this year, underpinned by low interest rates and stimulus from central banks.
Silver fell 0.2% to $22.67 per ounce, but was up over 17% for the week, its best since 1987, bolstered by hopes for a revival in industrial activity.
“Investors are perceiving silver as being undervalued compared to gold and that is why silver has really surged,” said Kitco Metals senior analyst Jim Wyckoff, adding that the next price target would be $25.
Reuters, Globe staff
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