Energy Stocks Weigh Heavily on TSX

Suncor, Cenovus in Spotlight

Canada's main stock index was on course for its worst session in nearly five months on Monday, hit by a plunge in energy stocks as crude prices retreated on a decision by the Organization of the Petroleum Exporting Countries and their allies (OPEC+) to boost output.

TSX Composite index staggered 298.3 points, or 1.5%, to open a new week at 19,687.24.

The Canadian dollar faded 0.97 cents to 78.28 cents U.S.

National Bank of Canada raised target price on MEG Energy to $1.00 from $13.50. MEG shares stumbled 53 cents, or 6.7%, to $7.27.

National also cut the target price on Suncor Energy to $41 from $42. Suncor shares dropped $1.02, or 3.9%, to $25.45.

Finally, National raised the target price on Cenovus Energy to $20.00 from $19.50. Cenovus shares swooned 52 cents to $9.71.

ON BAYSTREET

The TSX Venture Exchange jettisoned 29.23 points, or 3.2%, to 879.08.

All but one of the 12 TSX subgroups were in the red, with energy plunging 3.8%, while consumer discretionary and real-estate stocks each slipped 1.8%.

Only gold’s 0.2% improvement held out against the tide.

ON WALLSTREET

U.S. stocks fell aggressively Monday on concern a rebound in COVID-19 cases would slow global economic growth. The selling picked up as the session continued and the Dow Jones Industrial Average was currently headed for its biggest drop of the year.

The 30-stock index moved earthward 785.48 points, or 2.3%, to open Monday at 33,902.37, exceeding a 2% decline seen in late January.

The S&P 500 fell 78.93 points, or 1.8%, to 4,248.23, with energy and industrial sectors as the worst performers.

The NASDAQ faltered 209.08 points, or 1.5%, to 14,211.94.

COVID cases have rebounded in the U.S. this month with the delta variant spreading among the unvaccinated. The U.S. is averaging nearly 30,000 new cases a day in the last seven days ending Friday, up from a seven-day average of around 11,000 cases a day a month ago, according to data from the Centers for Disease Control. Cases were already flaring up around the world because of the delta variant.

United and American Airlines shares lost more than 7%. Delta fell 6%. Along with shares of cruise lines and airlines, key stocks linked to the global economy pulled back. Boeing and General Motors each lost more than 5%. Caterpillar lost 3%.

Energy stocks were among the worst performers in the market, with with ConocoPhillips off by more than 3%. Exxon Mobil lost 3%. WTI crude shed 6% to about $68.12 a barrel.

Banks took a hit as yields fell, crimping their profitability prospects. JPMorgan and Bank of America each dropped about 2.5%.

Big Tech shares were not immune to the sell-off with Apple and Alphabet each down more than 2%.

Yet certain defensive stocks gained amid the market selloff. Walmart and Procter & Gamble shares traded into the green, along with many utilities stocks.

Despite Monday’s decline, the overall damage to the market remains tame. The S&P 500 is still just 3% below its record reached last week and investors are hoping more better-than-expected earnings results will put a bottom under the market.

A busy week of earnings is on deck, with nine Dow components set to report and 76 S&P companies will provide quarterly updates. United Airlines and American Airlines will report, as will social media companies Snap and Twitter. CSX, Johnson & Johnson, Coca-Cola, Honeywell, IBM, Intel and Netflix are also on the docket.

Prices for 10-Year Treasurys climbed, lowering yields to 1.18% from Friday’s 1.30%. Treasury prices and yields move in opposite directions.

Oil prices slid $4.15 to $67.66 U.S. a barrel.

Gold prices handed back $1.90 to $1,813.10 U.S. an ounce.