Financials Weigh TSX Midday

Brookfield, Enbridge in Focus

Financial stocks pulled Canada's main stock index lower on Wednesday after two of the country's biggest banks reported a drop in quarterly profit, while investors waited for comments from U.S. Federal Reserve Chair Jerome Powell.

The TSX Composite fell 47.05 points to pause for lunch Wednesday at 20,230.36.

The Canadian dollar regained 0.34 cents to 73.94 cents U.S.

The financial sector fell but is set to end the month with gains as investors place their bets on higher margin differentials earned by lenders as central banks continue to raise rates.

The Bank of Canada is expected to raise rates by 25 basis points next week.

Both National and RBC reported a drop in profit from the previous year, as the lenders set aside higher provisions for bad debts in the face of the most anticipated recession.

National shares tailed off $3.73, or 3.8% midday, to $94.69, while RBC stepped back $1.35, or 1%, to $132.42.

Brookfield Asset Management said it will buy a 49% stake in the education portfolio of Sweden's SBB for $870.42 million. Brookfield shares eked up eight cents to $61.14.

Canadian Natural Resources forecast higher production for 2023. Natural Resources shares took on 20 cents to $80.91.

Enbridge expects higher core earnings next year as the firms seek to capitalize on higher oil and gas prices. The pipeline operator also said that Greg Ebel would succeed retiring President and CEO Al Monaco. Enbridge shares improved a dime to $55.62.

ON BAYSTREET

The TSX Venture Exchange nicked higher 0.89 points to 579.81.

The 12 subgroups were evenly split midday, with information technology gaining 1.2%, health-care better 0.6%, and gold, stronger 0.5%.

The half-dozen laggards were weighed down most by financials and consumer staples, each off 0.7%, and energy, slipping 0.2%. `

ON WALLSTREET

The Dow Jones Industrial Average fell Wednesday as Wall Street waded through new economic data and awaited an afternoon speech on the economy from Federal Reserve Chair Jerome Powell.

The 30-stock index swooned 138.54 points, still off its lows of the morning, to move into Wednesday afternoon at 33,713.99.

The S&P 500 dropped 2.77 points to 3,954.86.

The NASDAQ gained 33.55 points to 11,017.33.

Despite mixed trading for the final day in November, the three major indexes remain poised to end the month positively.

The Dow was on pace to end the month up slightly under 3%. The S&P 500 is poised to add 2.1%.

Lagging behind the other two, the NASDAQ is on track to end November 0.3% higher.

All signs have been pointing to weak sales of home furnishings after consumers spent heavily in the category during the pandemic. In recent days, companies like Williams-Sonoma and RH have received downgrades.

However, Wayfair shares are up Wednesday after reporting strong five-day holiday weekend sales. From Thanksgiving to Cyber Monday, the company saw a low-single digit sales increase in the U.S. compared with the same period last year.

Jobs opening data from the U.S. Labor Department released later Wednesday showed the number of openings falling and coming in below expectations. On top of that, pending home sales declined for the fifth consecutive month in October, according to data from the National Association of retailers.

But the Bureau of Economic Analysis also said Wednesday that third-quarter GDP increased at a 2.9% annual rate, according to its second estimate. That was revised higher from the 2.6% first estimate, showing the economy is stronger than previously thought.

Investors are waiting for Powell’s speech at the Brookings Institution this afternoon that may give further insight into the central bank’s thinking on future interest rate increases. The Fed is slated to meet later this month and is largely expected to deliver a smaller 0.5-percentage-point rate hike after four consecutive 0.75-percentage-point increases to tame high inflation. Any signal of a pivot on future rate hikes would likely send markets higher.

Prices for the 10-year Treasury sank, raising yields to 3.77% from Tuesday’s 3.76%. Treasury prices and yields move in opposite directions.

Oil prices increased $2.35 to $80.55 U.S. a barrel.

Gold prices gained $3.40 to $1,767.10 U.S. an ounce.