A display showing the S&P/TSX Composite Index is seen inside the TMX Market Centre in downtown Toronto. (Photo: THE CANADIAN PRESS/Tijana Martin)
Canada’s main stock market took a sharp dip on Tuesday, with the S&P/TSX composite index falling by 144.71 points, closing at 27,054.14. The downturn came as new inflation data from both Canada and the United States sparked fresh worries among investors.
Meanwhile, U.S. stock markets showed mixed results. The Dow Jones Industrial Average dropped 436.36 points to 44,023.29, and the S&P 500 slipped 24.80 points to 6,243.76. In contrast, the Nasdaq composite climbed 37.47 points, ending the day at 20,677.80, buoyed by gains in tech shares.
Rising Inflation Unnerves Markets
New numbers showed inflation in the United States rose to 2.7% in June, up from 2.4% in May. This uptick was mainly driven by price hikes in imported items like clothing and toys. The surprise jump has added pressure to the markets, dashing hopes for lower interest rates anytime soon.
On the Canadian side, Statistics Canada reported a 1.9% annual inflation rate for June, up slightly as well.
Kim Inglis, senior portfolio manager at Raymond James, noted,
“Inflation is something everyone is watching closely. Trade tensions and tariffs are only adding more uncertainty.”
Trade Worries Weigh Heavily
According to Inglis, trade tensions are a key factor dragging the TSX down. Ongoing tariff discussions are adding to investor unease. In fact, Prime Minister Mark Carney signalled earlier in the day that a fully tariff-free trade deal with the U.S. is unlikely.
“There are some negative headlines today that are shaping the market’s mood,” Inglis added.
Investors are growing increasingly cautious as both inflation and trade concerns create a cloud of economic uncertainty.
Tech Stocks Offer Some Relief
Despite the market turbulence, tech stocks in the U.S. stood out. Shares of Nvidia jumped 4% after the company revealed that the U.S. government will resume issuing licenses for its H20 chip—a major relief for investors. Deliveries of the chip are expected to start again soon.
Inglis pointed out,
“AI is everywhere now. From consumer gadgets to corporate tools, it's become a vital part of modern life. The appetite for AI is only growing.”
This surge in demand for AI-related products helped cushion the broader market losses, particularly for the Nasdaq.
Banks Show Mixed Earnings
Large U.S. banks painted a mixed picture.
- JPMorgan Chase saw its shares slip by 0.7%, despite beating profit expectations. CEO Jamie Dimon cited tariffs and other economic risks as ongoing threats.
- Citigroup, however, gained 3.7% after delivering strong earnings.
- Wells Fargo dropped sharply, down 5.5%, after cutting its profit outlook for one of its key revenue streams.
Canadian Dollar and Commodities
The Canadian dollar traded at 72.94 cents US, a slight drop from the previous day’s 73.03 cents US.
In commodities:
- Crude oil (September contract) fell by 44 cents to $65.37 US per barrel.
- Gold (August contract) dropped $22.40 to $3,336.70 US per ounce.
