TORONTO – North American stock markets closed lower for a second straight day Tuesday while the Canadian dollar rose more than half a cent.
The S&P/TSX composite lost 109.49 points to 15,043.15, after falling 17.38 points on Monday. The loonie traded at 83.21 cents US, up 0.63 of a U.S. cent from Monday’s close.
The Dow Jones industrial average closed down 36.94 points at 18,068.23, the Nasdaq fell 17.38 points to 4,976.19 and the S&P 500 lost 6.21 points to 2,099.12.
Chris King, portfolio manager at Morgan, Meighen and Associates, said recent market fluctuations are largely seasonal, referring to the adage that cautions investors to “sell in May and go away.”
“The U.S. markets have bounced around a little bit, but you typically see this sort of volatility,” said King. “I wouldn’t be surprised to see it pull back a little bit and drift into the summer before stronger markets in the fall. So all of this is OK.”
In corporate news, shares of Verizon Communications Inc. (NYSE:VZ) were down 18 cents to US$49.62 after news that the biggest U.S. wireless carrier has struck a deal to buy AOL Inc. (NYSE:AOL) for US$4.4-billion. The deal will give Verizon access to AOL’s various digital content platforms, including the Huffington Post, TechCrunch and Engadget websites.
“It is a large deal,” said King. “You’ve got an old-line telecommunications company buying a newer-age company in an attempt to make sure its product offering is robust. They’re paying a good premium for it.”
On commodity markets, the June crude contract closed up $1.50 at US$60.75 a barrel while June gold rose $9.40 to US$1,192.40 an ounce.
While most of the TSX sectors closed lower, the gold sector was 0.6 per cent higher, while the energy sector was down 0.32 per cent.
“Despite the rise in U.S. energy inventories, the discount on Canadian oil continues to narrow a little bit, and that’s because the refiners are looking for Canadian product to put in their refineries,” said King.
“It’s heavier, and their refineries are built to process that heavier crude, as opposed to the lighter stuff that might come out of the U.S.”
Government bonds have been hit with a sell-off lately, as traders have been anticipating higher inflation out of the eurozone. That has dampened the performance of U.S. markets.
However, King notes that rising interest rates in Europe are a positive.
“It’s good to see rising rates in Europe,” said King.
“A lot of the Greek action has delayed normal market recovery … so it’s good to see it start to move in the right direction,” he said, referring to fears that Greece might default on its sovereign debt.
On Tuesday, Greece repaid a 757-million euro debt to the International Monetary Fund by dipping into an emergency fund.