TSX pulls back on final day of strong week on lower oil; New York indexes mixed

TORONTO – A pullback in oil prices and disappointing retail sales data pushed the Toronto stock market to a lower close Friday after four consecutive advances.

The Toronto Stock Exchange’s S&P/TSX index lost 117.96 points to 12,813.40.

Energy stocks on the TSX took a beating, retreating 1.67 per cent as the March contract for benchmark North American crude slipped $1.13 to US$29.64 a barrel.

In New York, markets were mixed, with the Dow Jones industrial average falling 21.44 points to 16,391.99 and the broader S&P 500 off 0.05 of a point at 1,917.78.

Meanwhile, the Nasdaq composite index gained 16.89 points to 4,504.43 as tech stocks strengthened.

In economic news, Statistics Canada reported that retail sales dropped 2.2 per cent month over month to $43.2 billion in December after having advanced 1.7 per cent in November.

The last time retail sales saw a month-over-month drop of that magnitude was April 2010, when they fell 2.3 per cent, the agency said.

Experts said the decrease was largely due to unseasonably warm weather and lighter than usual snowfalls in December, as well as the impact of Black Friday pre-holiday sales events that led to stronger numbers in November.

Meanwhile, the annual inflation rate reached two per cent last month as the weakened loonie caused prices of imported goods like fresh fruits and vegetables to soar.

Statistics Canada said January’s inflation figure was the highest since November 2014.

“Normally, inflation is driven by solid growth, solid demand from the consumer,” said Cavan Yie, an analyst at Manulife Asset Management. “But in this case it’s driven by foreign exchange.”

Yie said the combination of high inflation and negative sales growth — a phenomenon sometimes referred to as “stagflation” — bodes poorly for the Canadian economy.

“You have low growth and you have high inflation,” said Yie. “When you have those two elements together it’s not good for the Canadian consumer, because their purchasing power gets eroded.”

Retail stocks were also struggling south of the border after holiday-season results from department store operator Nordstrom disappointed Wall Street. The company said its sales were weaker than it expected and its profits were hurt because it had to match discounts offered by competitors.

In commodity news, the March contract for natural gas fell five cents to US$1.80 per mmBtu, April gold rose $4.50 to US$1,230.80 an ounce and March copper was unchanged at US$2.08 a pound.

The Canadian dollar lost 0.10 of a U.S. cent at 72.63 cents US.

In Europe, stocks fell as the leaders of Britain and the rest of the 28-country European Union entered a second day of a summit on the U.K.’s membership in the bloc. Talks were stalled over a series of issues, including immigration rights.

Germany’s DAX fell 0.8 per cent, while France’s CAC 40 and Britain’s FTSE 100 both declined 0.4 per cent.

— With files from The Associated Press

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Note to readers: This is a corrected story: A previous version gave incorrect figures for the TSX close