Canada's main stock index fell on Tuesday as lower oil prices pulled down energy shares and with the market wary as it monitored congressional testimony by U.S. Federal Reserve Chair Janet Yellen.
The S&P/TSX composite index fell 109.52 points to stop for lunch at 15,061.71. Even so, the TSX has been one of the strongest performers among global stock market indexes this year, rising about 11%.
The Canadian dollar plummeted 0.47 cents to 92.90 cents U.S.
The gold-mining sector rebounded, following a selloff in the previous session, as the price of bullion climbed. Barrick Gold Corp gained 1% to $20.45, and Goldcorp rose 0.6% to $29.94.
Financials advanced, as Royal Bank of Canada climbed 0.5% to $79.18, and Bank of Nova Scotia added 0.4% to $72.78.
Shares of energy producers were hit by a decline in the price of oil. Canadian Natural Resources gave back 2.5% to $47.31, and Suncor Energy Inc lost 1.8% to $44.17.
Yellen told a Senate committee that the U.S. economic recovery remains incomplete, with a still-ailing job market and stagnant wages justifying loose monetary policy for the foreseeable future.
Canadian resale home prices rose sharply in June, but the pace of 12-month price inflation slowed, the Teranet-National Bank Composite House Price Index showed on Monday.
ON BAYSTREET
The TSX Venture Exchange fell 11.65 points to 1,008.57.
All but two of the 14 Toronto subgroups were lower by noon, weighed mostly by energy stocks, down 2.6%, while metals and mining slipped 2.1%, and gold shed 1.6% of its strength.
The two lone gainers were financials, up 0.4%, and consumer staples, up 0.3%
ON WALLSTREET
Investors were caught off guard Tuesday by an explicit warning from the Federal Reserve about valuations on social media and biotechnology stocks.
The Dow Jones Industrials moved forward 16.76 points to 17,072.18
The S&P 500 slipped 0.06 points to 1,977.04, and the NASDAQ composite slid 12.31 points to 4,428.11.
Goldman Sachs and JPMorgan were the top gainers on the Dow after both reported quarterly earnings that beat analysts' expectations. JPMorgan stock is up over 3.5%.
The results came one day after Citigroup reported earnings that beat expectations and announced a $7-billion U.S. settlement with the federal government over mortgages it sold in the run-up to the financial crisis.
Johnson & Johnson also reported earnings that beat expectations. The maker of consumer health care products boosted its outlook for full-year earnings as well. But the stock was down more than 1%, making it the biggest drag on the Dow.
Reynolds American and Lorillard announced plans to merge in a cash-and-stock transaction valued at $27.4 billion U.S. Under the terms of the deal, Reynolds will sell certain brands and assets to Imperial Tobacco, while British Tobacco will maintain its stake in Reynolds.
Shares of Reynolds and Lorillard had rallied ahead of the widely-anticipated merger, but both stocks were down sharply after the news came out. Lorillard is down over 7%.
Shares in Boeing were up as the plane maker and its main rival Airbus woo customers at the aviation industry's biggest annual gathering.
Valero shares were down nearly 3% after the oil refiner told investors that quarterly earnings would come in below market expectations.
Michael Kors stock fell on a negative analyst report. Kors is up close to 30% in the past year, but there are questions about whether the momentum can continue.
As for Yellen, she gave her semiannual monetary policy report to the Senate Banking Committee.
Yellen opened her remarks reiterating the Fed's intention to keep interest rates at historic lows for awhile longer. The economy has improved, but the recovery is not complete, she said.
She said prices for stocks, real estate and high grade corporate bonds remain "in line with historic norms."
In the Fed's written report to Congress, the central bank singled out social media and biotechnology stocks as being "substantially stretched."
In economic news, the government said retail sales increased 0.2% in June from the month before. That was a smaller gain than expected, but economist said the report showed strength below the surface.
Prices for 10-year U.S. Treasuries inched up, dropping yields to 2.54% from Monday’s 2.55%. Treasury prices and yields move in opposite directions.
Oil prices let go of $1.73 to $99.18 U.S. a barrel.
Gold prices slid eight dollars to $1,298.70 U.S. an ounce.
