Canadian Stock Market Slumps as U.S. Markets Rebound

Canada's main stock index declined on Thursday, led by losses in sectors such as industrials and real estate, while U.S. markets rebounded following one of their worst drops this year. The S&P/TSX composite index decreased by 143.06 points to 24,413.94. In New York, stocks partially recovered from Wednesday's losses after the U.S. Federal Reserve's latest comments on the pace of future interest rate reductions. The Dow Jones industrial average rose 15.37 points to 42,342.24.

The S&P 500 index fell 5.08 points to 5,867.08, while the Nasdaq composite dropped 19.93 points to 19,372.77. 'There's still some caution after yesterday's outsized move,' said Angelo Kourkafas, senior investment strategist at Edward Jones. 'Markets are still dealing with the aftermath of the Fed meeting yesterday.' On Wednesday, the Fed lowered its key interest rate by a predicted quarter-percentage point. The cut wasn't unexpected, said Kourkafas, but the accompanying projections from the Fed were: an anticipated two cuts in 2025, instead of the four previously forecast by the central bank. The central bank signaled it's entering a new phase, and they don't expect inflation to return to target in 2025, said Kourkafas. 'Markets are back in the mode of high interest rates for longer.' The announcement emphasized that the U.S. economy continues to perform better than the Canadian economy, said Kourkafas, implying that in the new year, interest rates in Canada could keep diverging from those south of the border. 'I think the concern about divergence is reflected in the Canadian dollar, which is at near a five-year low,' he said. The Canadian dollar traded for 69.59 cents US compared with 69.72 cents US on Wednesday, continuing its downward trend. However, some of the economic benefits from the Bank of Canada's more aggressive rate cuts should start filtering through the economy, Kourkafas added

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