U.S. stocks ended sharply higher on Monday, with the Dow hitting a record closing high, as weekend hostilities between the United States and Iran eased and as major technology-related shares rose following recent selling.
The TSX, however, ended lower in a relatively broad decline. Philip Petursson, chief investment strategist at IG Wealth Management, said it wasn’t clear why Canadian and U.S. markets diverged, but that it may have to do with the shortened week in Canada and the U.S., with traders “closing out some positions.”
He said the moves in the market appeared to be driven by sentiment, “but where that sentiment is coming from is the real challenge.”
The S&P/TSX Composite index ended down 156.18 points, or 0.5%, at 34,823.82.
Just two of the 10 major sectors ended higher, including heavily weighted financials, which added 0.3%.
The price of oil settled 2.2% higher at US$70.75 a barrel after attacks by the U.S. and Iran underscored the fragility of their interim peace deal, while cautious hopes of a continued recovery in energy shipping through the Strait of Hormuz limited gains. Even with the higher crude price, the TSX energy sector ended with slight losses.
The materials group, which includes metal mining shares, fell 1.1%. The price of gold was down 1.8%, moving toward the bottom of its range since November. Consumer discretionary fell 1%, with shares of apparel retailer Aritzia Inc down 2.9%, while consumer staples ended 1.7% lower.
The U.S. and Iran on June 17 signed a memorandum of understanding aimed at ending the conflict. Under the document, both sides agreed to cease hostilities and reopen the Strait of Hormuz.
“The fact that we had hostilities between the U.S. and Iran over the weekend really didn’t have a negative effect on the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “The market is looking forward and preparing for earnings season, which is not that far away,” he said.
Most S&P 500 companies are set to begin reporting second-quarter results after mid-July. Communications services led gains among S&P 500 sectors.
Shares of Comcast rose 4.5% after the media and cable provider said it plans to separate into two independent, publicly traded companies through a tax-free spinoff of NBCUniversal and Sky.
SpaceX jumped 7.2% after Nasdaq said the newly listed company will be added to the Nasdaq 100 index on July 7. Google parent Alphabet closed up 4.8% as it kicked off its first day as a Dow component.
The Dow Jones Industrial Average rose 306.63 points, or 0.59%, to 52,182.74, the S&P 500 gained 86.41 points, or 1.18%, to 7,440.43 and the Nasdaq Composite gained 522.53 points, or 2.07%, to 25,820.14.
Concerns about AI spending had hit shares of artificial intelligence-related companies recently, including semiconductors and many of the Magnificent Seven group of megacap stocks. On Monday, the information technology index gained 1.7%. RBC Capital Markets cited earnings strength and a supportive macro backdrop as it raised its 12-month target for the S&P 500 index to 8,150 from 7,900.
Advancing issues outnumbered decliners by a 1.54-to-1 ratio on the New York Stock Exchange. There were 272 new highs and 114 new lows on the NYSE. On the Nasdaq, 3,017 stocks rose and 1,919 fell as advancing issues outnumbered decliners by a 1.57-to-1 ratio. The S&P 500 posted no new 52-week highs and no new lows while the Nasdaq Composite recorded no new highs and no new lows.
Volume on U.S. exchanges was 20.15 billion shares, compared with the 23.50 billion average for the full session over the last 20 trading days.
Reuters, The Canadian Press, Globe staff
