TORONTO — Canada's main stock index fell 200 points Thursday amid widespread weakness, while U.S. stock markets slid in the afternoon after a mixed trading day, led by a 2.8 per cent decline on the Nasdaq.
Semiconductor giant Nvidia dragged the Nasdaq and the S&P 500 lower, as its shares dropped 8.5 per cent after reporting earnings after the bell Wednesday.
The Dow Jones industrial average was down 193.62 points at 43,239.50. The S&P 500 index was down 94.49 points at 5,861.57, while the Nasdaq composite was down 530.85 points at 18,544.42.
In Toronto, the S&P/TSX composite index closed down 200.12 points at 25,128.24.
Nvidia’s report, as usual, handily beat expectations, said Andrew Buntain, vice-president and portfolio manager at Fiduciary Trust Canada.
But with concerns about the spending on artificial intelligence and the potential disruption from Chinese upstart model DeepSeek, “some air has come out of that stock,” he said.
“It is a lesson in market expectations, in terms of how these things are priced and what the market expects for future earnings growth,” said Buntain.
“They have to grow into their valuations.”
On the economic front, the U.S. government said growth was 2.3 per cent in the fourth quarter of 2024. The figure was unchanged from the government's initial estimate, but it raised its estimate for a measure of inflation during the quarter.
The combination of slowing economic growth and rising inflation is difficult for central bankers to address, said Buntain — and tariffs would add to that pressure, as they are generally inflationary.
Whether tariffs will be implemented, on what and for how long, are all unanswered questions still, said Buntain.
“We'll know more on March 4. And then if they do happen, how long they remain for will really inform central bankers and policy makers as to what direction they should take,” he said.
“If they stay on for longer, there could be lasting impacts that a central bank would have to contend with.”
Right now, “all eyes are on the American consumer,” said Buntain.
“It's starting to show up in some of the reports now that the U.S. consumer isn't exactly as confident as they were in recent years. If that starts to show up in a faltering consumer spending pattern, then that has ramifications that have to be addressed as well,” he said.
In Canada, where the economic trajectory was already weaker heading into 2025, the shadow looms even larger, he said.
“If the economy here is slowing and the tariffs do generate a recessionary circumstance, then the central bank has to lower rates to respond to that, to try to stimulate the economy out of a tariff-induced recession. And that means a lower Canadian dollar,” he said.
That puts the Bank of Canada in a difficult situation as a weaker loonie is also inflationary, noted Buntain.
On Bay St., CIBC, RBC and TD reported results to cap off earnings season from the big lenders. All of the Big Six banks beat analyst expectations.
The Canadian dollar traded for 69.34 cents US compared with 69.74 cents US on Wednesday.
The April crude oil contract was up US$1.73 at US$70.35 per barrel and the April natural gas contract was down three cents at US$3.93 per mmBTU.
The April gold contract was down US$34.70 at US$2,895.90 an ounce and the May copper contract was up three cents at US$4.62 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Feb. 27, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
