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Stock market updates: Wall Street falls, China’s weak economy

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NEW YORK –

Stocks worldwide are falling Tuesday as China’s faltering recovery raises worries for the rest of the global economy.

The S&P 500 sank 0.9% in afternoon trading after data showed a deepening slump in July for the world’s second-largest economy. The Dow Jones Industrial Average fell 305 points, or 0.9%, at 35,001, as of 2:03 p.m. Eastern time, and the Nasdaq composite lost 0.8%.

Coming into this year, the expectation was that China’s economy would grow enough after the government removed anti-COVID restrictions to prop up a global economy weakened by high inflation. But China’s recovery has faltered so much that it unexpectedly cut a key interest rate on Tuesday and skipped a report on how many of its younger workers are unemployed.

Worries about the knock-on effects for the rest of the global economy are weighing on Wall Street, where stocks have already been retrenching in August. The pullback follows a gangbusters first seven months of the year that critics called overdone.

In the U.S., the economy has remained more resilient than expected despite higher interest rates. A report on Tuesday showed growth for sales at U.S. retailers accelerated by more in July than economists expected.

“U.S. retail sales are charging ahead, and a lot of that may be on charge cards,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Still, the U.S. consumer is showing few signs of slowing down.”

The strong retail sales report raises hopes that the U.S. economy can keep growing and avoid a long-predicted recession. But on the downside for markets, it could also raise the Federal Reserve’s resolve to keep interest rates high in order to fully grind down inflation.

The Fed has already hiked its key interest rate to the highest level in more than two decades. High rates work by bluntly dragging on the entire economy and hurting prices for investments.

“Numbers like today’s just make it more likely that rates will remain higher for longer, even if the Fed doesn’t hike them next month,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

Treasury yields initially rose following the retail sales report, approaching their highest levels since the 2007-09 Great Recession, before easing.

A faltering Chinese economy could mean less demand for oil and other commodities.

The price for a barrel of U.S. crude oil dropped 2.1% to $80.76. Prices also fell for Brent crude, the international standard, and for copper.

The declines meant stocks of energy and raw-material producers were among the biggest losers in the S&P 500. Miner Freeport-McMoRan fell 3.4%, and Exxon Mobil’s 2.5% drop was one of the heavier weights on the index.

Banks were also falling, continuing a rocky run since the high-profile failures of several during the spring that were caused in part by higher interest rates.

Smaller and midsized banks have been under particularly scrutiny from investors and credit-rating analysts, and KeyCorp, Comerica and Citizens Financial Group all fell at least 4% for some of the heavier losses in the S&P 500.

The largest loss came from Discover Financial Services. It dropped 10.6% after it said its CEO is stepping down, effective immediately.

Elsewhere on Wall Street, more reports on corporate profits that came in better than expected helped to limit the market’s losses.

Home Depot gained 0.6% after it topped expectations for both revenue and profit, though it’s feeling the effects of much higher interest rates. The home improvement retailer said it’s seeing continued pressure on some types of big-ticket projects.

Stocks of homebuilders were bouncing between gains and losses after Warren Buffett’s Berkshire Hathaway disclosed it bought stakes in several of them. Other investors often try to copy the famed investor’s moves, and D.R. Horton rose 2.9%.

In stock markets abroad, indexes slumped in Europe after falling 1% in Hong Kong and 0.1% in Shanghai.

Pressures are appearing worldwide. Also Tuesday, Russia’s central bank raised its main lending rate in an emergency move to strengthen the ruble after the currency reached its lowest value since early in the war with Ukraine. In the U.K., data showed wages for workers are growing at a strong pace, which threatens to add upward pressure on its already high inflation.

Japanese stocks were an exception. The Nikkei 225 rose 0.6% after Japan reported unexpectedly strong growth in its economy during the spring.

In the bond market, the yield on the 10-year Treasury slipped to 4.19% from 4.20% late Monday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield, which more closely follows expectations for the Fed, fell to 4.94% from 4.97%.

——

AP Business Writers Joe McDonald, Matt Ott and Alex Veiga contributed to this report.

 

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A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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