TORONTO – North American stock markets moved lower Thursday after the U.S. Senate failed to approve a scaled back fiscal stimulus package.
The technology sector led the declines, reversing a one-day rally on Wednesday, as investors pocketed profits amid nervousness about the economic recovery.
Markets were “whipsawed,” falling in afternoon trading after posting early gains, said Candice Bangsund, portfolio manager for Fiera Capital.
She said the catalyst was likely the fading prospect of another fiscal package before the Nov. 3 U.S. presidential election.
“Investors are awaiting that additional fiscal stimulus from U.S. policy-makers who have been unable to come to a compromise and that’s weighing on sentiment,” she said in an interview.
The sell-off became self-fulfilling by worried investors, Bangsund said.
“Given that we’ve seen such a strong rally and then, of course, that sharp sell-off last week that began in the tech space, I think the sentiment is just a little bit nervous so you’re getting a little more of an erratic behaviour in markets.”
The S&P/TSX composite index closed down 198.28 points or 1.2 per cent to 16,185.32.
In New York, the Dow Jones industrial average lost 405.89 points at 27,534.58. The S&P 500 index dropped 59.77 points at 3,339.19, while the Nasdaq composite was down 221.97 points or two per cent at 10,919.59.
Technology has been vulnerable to a pullback after a strong rally left the sector “over-owned, overbought and overvalued,” said Bangsund.
She said the TSX outperformed U.S. markets because Canada’s technology sector is smaller and the overall market is less impacted by the tech-led decline.
Technology lost 1.9 per cent as all but two companies were lower.
Lightspeed POS Inc. was one exception. Its shares climbed 2.6 per cent a day after the Montreal-based retail payment technology firm announced an initial public offering of its