Wall Street slips as inflation jitters spark broad sell-off | Canada News Media
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Economy

Wall Street slips as inflation jitters spark broad sell-off

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Wall Street lost ground on Tuesday as rising commodity prices and labor shortages fueled fears that, despite reassurances from the U.S. Federal Reserve, near-term price spikes could translate into longer-term inflation.

By late afternoon the indexes were off their session lows, but the sell-off was fairly evenly dispersed across the sectors.

Economic data released on Tuesday from the Labor Department showed job openings at U.S. companies jumped to a record high in March, further evidence of the labor shortage hinted by Friday’s disappointing employment report.

The report suggests labor supply is not keeping up with surging demand as employers scramble to find qualified workers.

Burrito chain Chipotle Mexican Grill announced it would hike the average hourly wage of its workers to $15, a further sign that the worker shortage in the face of a demand revival could add fuel to the inflation surge.

That worker shortage, along with a supply drought in the face of booming demand could contribute to what is seen as inevitable prices spikes, which the U.S. Federal Reserve has repeatedly said are unlikely to translate into long-term inflation.

“The market is beginning to debate whether or not the Fed is right on inflation,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “Will this be more than transitory? That’s what the market is beginning to discount.”

Market participants will scrutinize the Labor Department’s CPI report, due early Wednesday, for further signs of potential inflationary pressures. (Graphic on inflation) https://tmsnrt.rs/2SxpkST

The Dow Jones Industrial Average fell 456.51 points, or 1.31%, to 34,286.31, the S&P 500 lost 33.76 points, or 0.81%, to 4,154.67 and the Nasdaq Composite dropped 5.58 points, or 0.04%, to 13,396.28.

All 11 major sectors of the S&P 500 were in negative territory, with energy stocks suffering the largest percentage loss.

The CBOE Volatility index, a measure of investor anxiety, touched its highest level in two months.

First-quarter reporting season, which is providing the first year-on-year comparison to pandemic-related shutdowns, is approaching the finish line with 451 constituents of the S&P 500 having reported. Of those, 86.9% have beaten consensus expectations, according to Refinitiv IBES.

Analysts now see first-quarter S&P earnings growth of 50.5% year on year, up substantially from the 16% growth forecast at the beginning of the year, per Refinitiv.

Boeing Co was down 1.6% after the planemaker announced deliveries of its 737 MAX fell to just four planes in April due to an electrical problem.

Tesla Inc continued its slide, dropping 1.2% following the electric automaker’s decision to expand its Shanghai plant owing to heightened U.S.-China tensions.

Mall REIT Simon Property Group Inc fell 2.3% after the company said it does not expect a return to 2019 occupancy levels until next year or 2023.

L Brands Inc announced it will split into two publicly traded companies, Bath & Body Works and Victoria’s Secret. Its stock dropped 3.3%.

Declining issues outnumbered advancing ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored decliners.

The S&P 500 posted five new 52-week highs and one new low; the Nasdaq Composite recorded 18 new highs and 216 new lows.

(Reporting by Stephen CulpAdditional reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Lisa Shumaker)

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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