TORONTO — Canada's main stock index fell more than 350 points Friday amid broad-based losses, while a 2.2. per cent loss on the Nasdaq led the declines in U.S. stock markets.
The S&P/TSX composite index closed down 367.05 points, or 1.4 per cent, at 25,147.03.
In New York, the Dow Jones industrial average was down 748.63 points, or 1.7 per cent, at 43,428.02. The S&P 500 index was down 104.39 points, or 1.7 per cent, at 6,013.13, while the Nasdaq composite was down 438.36 points at 19,524.01.
It was a “risk-off” day across the board as investors reacted to new economic data hinting at a potential slowdown, said Angelo Kourkafas, senior investment strategist at Edward Jones.
One report suggested U.S. business activity is close to stalling, while another showed consumers’ inflation expectations are rising.
“The combination of potentially weaker growth in the first quarter together with some still stubborn inflation is driving the pullback that we are seeing from all-time highs in the markets,” said Kourkafas.
However, he noted that despite the volatility, markets have been “pretty rational” so far this year given the circumstances, with economic data surprises and the potential for tariffs around the bend.
“But I think the underlying theme of resilience, which shows up in corporate profits ... provides that buffer against all these headlines and concerns,” he said.
Next week will see earnings from major Canadian banks roll in, and investors will watch for confirmation that consumer trends remain steady, said Kourkafas.
“The sector has been one that has been a very strong performer,” he added. “So the bar is a little elevated compared to prior quarters.”
The week will also bring earnings from semiconductor giant Nvidia, one of the major players in the ongoing investor bets on artificial intelligence.
“That's going to be a big market driver, given especially how artificial intelligence remains ... one of the key themes for 2025,” said Kourkafas.
Investors will also be eyeing any updates on the tariff situation with the U.S. as well as fresh data on Canadian GDP, both of which could inform the Bank of Canada’s next interest rate decision.
The central bank is still expected to cut in March, said Kourkafas.
In a speech Friday, central bank governor Tiff Macklem warned that tariffs would weigh on Canadian economic growth while risking reigniting inflation. He said the central bank can only do so much to offset those effects with its monetary policy.
"In the pandemic, we had a steep recession followed by a rapid recovery as the economy reopened," he said.
"This time, if tariffs are long-lasting and broad-based, there won’t be a bounce-back. We may eventually regain our current rate of growth, but the level of output will be permanently lower. It’s more than a shock, it’s a structural change."
The Canadian dollar traded for 70.39 cents US compared with 70.48 cents US on Thursday.
The April crude oil contract was down US$2.08 at US$70.40 per barrel and the April natural gas contract was up four cents at US$4.13 per mmBTU.
The April gold contract was down US$2.90 at US$2,953.20 an ounce and the March copper contract was down five cents at US$4.56 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Feb. 21, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
