Stocks Struggle to Return to Breakeven

Bombardier, Baytex in Focus

Canada's main stock index fell on Wednesday after energy shares plunged on lower crude prices and as hotter-than-expected domestic inflation data fueled worries about aggressive interest rate hikes.

The S&P/TSX came off its lows of the morning, but remained in the red 191.17 points, or 1%, to move into noon hour EDT at 19,066.12.

The Canadian dollar fell 0.06 cents to 77.26 cents U.S.

Leading declines on the TSX, Baytex Energy was down 70 cents, or 9.8%, to $6.46, Secure Energy Services cratered 52 cents, or 8%, to $5.96, and MEG Energy, which fell $1.67, or 8%, to $19.28.

Bombardier workers on a key program for the Canadian business jet maker will decide on Wednesday whether to accept a new contract offer or walk off the job. Meantime, analysts at TD have cut the price target on the company’s stock to $62.00 from $69.00.

Bombardier shares shed 36 cents, or 1.5%, to $23.65.

On the economic scene, Statistics Canada reported May’s consumer price index rose 7.7% on a year-over-year basis, up from a 6.8% gain in April.

The agency adds, on a seasonally-adjusted monthly basis, the CPI increased 1.1% in May.


The TSX Venture Exchange remained lower 8.83 points, or 1.4%, to 644.14.

Eight of the 12 TSX subgroups were negative midday, as energy slid 4.6%, materials dropped 1.4%, and consumer staples lost 1.1%.

Health-care led the four gainers, up 1.8%, industrials picked up 0.7%, and consumer discretionary stocks advanced 0.4%.


The S&P 500 rose Wednesday, continuing gains from the previous session as stocks attempted a comeback from the lows of the bear market.

The Dow Jones Industrials reversed and had recaptured 2.49 points by lunch time Wednesday to 30,532.74.

The S&P 500 gained 2.61 points to 3,767.40.

The NASDAQ Composite jumped 22.34 points to 11,091.65.

The real estate and health care sectors drove outperformance in the S&P 500, with the sectors each up 1.4%. Shares of Crown Castle and American Tower jumped nearly 3%. Shares of Moderna increased 5%.

Consumer discretionary stocks such as homebuilders Lennar and D.R. Horton each jumped 3%.

Wall Street shook off fears of an economic downturn as Federal Reserve Chairman Jerome Powell on Wednesday told Congress the central bank has the “resolve” to bring inflation down. Investors are increasingly concerned aggressive monetary tightening would tip the U.S. economy into a recession.

Some Wall Street banks increased their odds of a downturn this week with Citigroup raising chances of a global recession to 50%, pointing to data that consumers are starting to pull back on spending.

Meanwhile, energy stocks took a hit as oil prices dropped on concern a slower economy will hurt fuel demand. The sector was the worst-performing on the broad market index, last down 3.7%.

Shares of Marathon Oil and ConocoPhillips dropped more than 5%, while Occidental Petroleum slid 4%. Exxon Mobil dipped 3%.
On Wednesday, the White House released a fact sheet calling for Congress to suspend federal gasoline and diesel taxes for three months.

The effort is meant to ease pressures at the pump for consumers during an election year.

On the earnings front, KB Home will post results after the market closes on Wednesday.

Treasury prices jumped, lowering yields to 3.17% from Tuesday’s 3.31%. Treasury prices and yields move in opposite directions.

Oil prices lost $3.51 to $106.01 U.S. a barrel.

Gold prices recovered $2.20 to $1,841.00 U.S. an ounce.