TORONTO — Canada's main stock index suffered its worst drop of the year Tuesday on a broad-based decline led by the energy and technology sectors.
The S&P/TSX composite index closed down 126.61 points to 17,779.41 for the largest daily decrease since Dec. 14.
The stock market has bounced around over the last couple of weeks after enjoying a surge to start the year. It is up about two per cent in January.
"The last couple of days have just been a bit of an exhale that we're not quite out of this yet," said Michael Greenberg, portfolio manager at Franklin Templeton Investment Solutions.
"Working from home will continue a little longer and economies won't reopen as quickly as we thought," he said.
A movement toward the end of last year to more cyclical, value sectors has taken a breather because COVID-19 case counts remain high and vaccines aren't rolling out as quickly as expected.
Greenberg said that's had an impact on energy, with expectations of demand roaring back not quite materializing.
"I don't think it's gone away, it's just being delayed a little bit as maybe COVID sticks around a little bit longer, keeps us home a little bit longer, keeps us out of airplanes a little bit longer," he said in an interview.
Also contributing to the unease is uncertainty about U.S. President Joe Biden's US$1.9-trillion stimulus package in light of Republican opposition.
Greenberg said it's normal for the market to take a breather once in a while after climbing strongly to start the year.
"I think from at least a medium-term perspective, really a lot is going to rely on the path of the virus, the path of vaccine and the potential timing of the reopening of the economy that obviously can unleash some pent-up demand."
After enjoying a strong increase in crude oil prices above US$53 a barrel, there's been a little softness.
Crude oil prices surged by about US$1 early on reports of an explosion in Saudi Arabia, but fell back later in the day.
The March crude oil contract was down 16 cents at US$52.61 per barrel and the March natural gas contract was up 3.8 cents at nearly US$2.64 per mmBTU.
The energy sector dropped 3.7 per cent with Vermilion Energy Inc., MEG Energy Corp. and Crescent Point Energy Corp. losing 8.8. 8.4 and 7.4 per cent, respectively.
Technology fell 1.6 per cent with Shopify Inc. down 4.2 per cent. BlackBerry shares climbed another 3.7 per cent, or 47.5 per cent, over the past five days, despite an analyst downgrade.
Consumer discretion and materials also decreased. Materials lost one per cent on a slip in gold prices. First Quantum Minerals Ltd. shares fell 7.3 per cent.
The February gold contract was down US$4.30 at US$1,850.90 an ounce and the March copper contract was down a penny at US$3.62 a pound.
Health care was one of four sectors that rose on the TSX. It climbed 2.1 per cent with cannabis producers Canopy Growth Corp. up 7.5 per cent and Aphria Inc. 7.4 per cent higher.
In New York, the Dow Jones industrial average was down 22.96 points at 30,937.04. The S&P 500 index was down 5.74 points at 3,849.62, while the Nasdaq composite was down 9.93 points at 13,626.06.
The Canadian dollar traded for 78.73 cents US compared with 78.51 cents US on Monday.
This report by The Canadian Press was first published Jan. 26, 2021.
Companies in this story: (TSX:APHA, TSX:WEED, TSX:FM, TSX:SHOP, TSX:BB, TSX:VET, TSX:MEG, TSX:CPG, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press