Netflix’s extreme weakness infected the technology sector and pushed Canada’s main stock index slightly lower in the middle of the week as the moon rose amid hot inflation data.
The combined S & P / TSX index closed with 20.44 points to 21,998.38.
In New York, the Dow Jones industrial index rose 249.59 points to 35,160.79. The S&P 500 index fell 2.76 points to 4,459.45 points, while the Nasdaq composite fell 166.59 points to 13,453.07 points.
Mood for growth sectors such as technology has worsened as shares of Netflix fell 35 percent after announcing on Tuesday night that it lost 200,000 subscribers in the first quarter, its first loss in more than a decade.
Mike Archibald, vice president and portfolio manager at AGF Investments Inc., said Netflix is putting pressure on other technology names, especially those that have already been under a lot of stress.
In Canada Shopify Inc. fell 13.9%, while Lightspeed Commerce Inc. was 6.2% lower, as the technology sector lagged behind TSX the most, losing 5.4%.
Companies that have benefited greatly from COVID-19 are facing a big weight loss for the second consecutive quarter as growth slows, Archibald said.
“This simply raises the question for some of the other types of high-ranking, expensive, more evolving names, what kind of multiplier to expect and what the financial performance will look like in the future,” he said in an interview.
“Many of these numbers have already been cut off from the street. But as we saw with Netflix last night, as we can see with others, they may not have been cut off enough, so I think that’s a big concern today.
Health decreased by 2.6% as several cannabis names were lower, led by Tilray Inc., which lost 8.3%.
Energy was TSX’s best-performing sector, ahead of crude oil prices, which faced a sharp drop in US inventories last week. There was a depletion of 8 million barrels compared to the expected increase of 3.1 million barrels.
The crude oil contract rose 14 cents to $ 102.19 a barrel in June, and the natural gas contract fell 23.9 cents a barrel in May from $ 6.94 a mmBTU.
Meg Energy Corp. rose 4.5 percent after shares of several energy producers rebounded after Tuesday’s sell-off.
Energy supplies remain a major problem, along with rising inflation and high levels of uncertainty over the Russia-Ukraine war.
“All of this is still putting upward pressure and interest in broader stocks, no matter what the commodity is doing,” Archibald said.
Demand is growing despite the blocking of COVID in China.
“I still think that momentum is in this part of the market and on the days when they sell out, they usually have good increases in the coming days.”
Communications was the second best performing, as shares of Rogers Communications Inc. rose 3.1% after reporting strong quarterly results that exceeded expectations.
Materials, which include metal producers, fertilizer companies and forestry companies, bounced back on Wednesday to end the day a little higher despite lower metal prices as shares of West Fraser Timber Co. Ltd. rose 9.6% after announcing a significant repurchase of shares with its surplus money.
The June gold contract fell $ 3.40 to $ 1955.60 an ounce, and the copper contract fell 6.6 cents to $ 4.65 a pound in May.
The Canadian dollar traded at 79.99 cents in the US compared to 79.21 cents in the US on Tuesday.
This was helped by inflation, which reached 6.7% last month, the fastest annual increase in more than three decades.
“Thinking it’s just a door there is now open to more aggressive tourism than the Bank of Canada,” Archibald said.
Federal Reserve Chairman Jerome Powell will provide his latest public comments Thursday before the central bank announced an expected 50-point interest rate hike next month.
This report from The Canadian Press was first published on April 20, 2022.
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