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Nasdaq briefly surpasses big milestone while other stock markets give back gains


TORONTO — The tech-heavy Nasdaq composite index surpassed 10,000 points for the first time Tuesday even as North America's other stock markets gave back some of their recent gains.

The S&P/TSX composite index closed down 141.17 points at 15,833.74.

In New York, the Dow Jones industrial average was down 300.14 points at 27,272.30. The S&P 500 index was down 25.21 points at 3,207.18, while the Nasdaq composite was up 29.01 points at 9,953.75 after hitting an intraday high of 10,002.50.

Stock markets have enjoyed strong rallies off the March lows with the S&P 500 recovering all the losses for the year on Monday and the Nasdaq setting new record highs.

Sectors that were particularly impacted by COVID-19 have been leading the markets higher, but there's also concerns about that movement being too fast.

"There's a growing discussion in the market about the disconnect that we were seeing in the market and potentially the real economy," said Natalie Taylor, a portfolio manager with CIBC.

Some concerns have outweighed some of the positives.

High stock valuations are being talked about as are headlines about a Republican congressman wanting to delay additional stimulus because the economy seems to be recovering.

"So just little things at the margin I think are wearing away at the very strong rally that we've seen," she said.

Despite Tuesday's pullback, however, the fundamental outlook about economic reopenings remains optimistic and hopeful, Taylor said.

In geographic areas that have reopened, reinfection rates have been manageable and last Friday's U.S. jobs number was very positive.

"The economic recovery is progressing better than expectations a few weeks back," she said, adding that monetary and fiscal stimulus have bolstered equity markets.

Investors are waiting for commentary Wednesday from the U.S. Federal Reserve even though interest rates aren't expected to change, Taylor said.

"I think that a lot will hinge on the tone that the Fed strikes. So maybe there's a little bit of nervousness in the market about that today," she said, adding the central bank needs to strike a very dovish tone to sustain the market rally.

"And I'm not sure how easy it'll be to do that, given that we've seen the turn in the real economy and that momentum is there. So it's going to be a fine balance that the Fed needs to strike tomorrow."

The Canadian dollar traded for 74.50 cents US compared with 74.72 cents US on Monday.

Ten of the 11 major sectors on the TSX were lower, led by energy, health care and real estate.

Energy dropped 3.5 per cent despite higher crude oil prices. Recent winners ShawCor Ltd. and Baytex Energy Corp. were down 16.8 and 9.6 per cent respectively.

The July crude contract was up 75 cents at US$38.94 per barrel and the July natural gas contract was down 2.2 cents at nearly US$1.77 per mmBTU.

Cannabis stocks lost recent gains with Hexo Corp. off 7.7 per cent.

Industrials was lower despite an 8.6 per cent gain by Bombardier Inc., which was heavily traded, as Air Canada fell 10.2 per cent.

Materials was the only winner on the day, gaining about one percentage point on higher gold prices. That helped Centerra Gold Inc., Barrick Gold Corp. and B2Gold Corp. Their shares gained 5.8, 3.6 and 3.1 per cent respectively.

The August gold contract was up US$16.80 at US$1,721.90 an ounce and the July copper contract was up 3.35 cents at nearly US$2.60 a pound.

This report by The Canadian Press was first published June 9, 2020.


Ross Marowits, The Canadian Press

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