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Tag: AI impact on stocks

  • Canadian Stocks Slide as Tech Weakness and GDP Miss Weigh on Markets

    Canadian Stocks Slide as Tech Weakness and GDP Miss Weigh on Markets

    Canada’s main stock index closed lower on Friday, mirroring declines in U.S. markets as weakness in technology stocks dragged broader indexes down.

    Brian Madden, chief investment officer at First Avenue Investment Counsel, said the pullback masked signs of underlying strength, pointing to gains in commodities and defensive sectors such as telecoms. He noted that despite the overall decline, there were more advancing stocks than decliners on the day.

    Technology and financial shares weighed most heavily on the S&P/TSX composite index. Madden said software stocks have been under pressure in both Canada and the United States, while financial stocks paused after a strong rally earlier this year.

    Canada’s Big Six banks reported solid earnings this week, beating expectations, but Madden said investors appeared to be taking profits after the sector’s recent run-up.

    Investors also digested new economic data from Statistics Canada showing gross domestic product contracted at an annualized rate of 0.6 per cent in the fourth quarter. The figure missed forecasts from the Bank of Canada and most economists, who had expected flat growth.

    StatCan said the contraction was largely driven by businesses drawing down inventories rather than producing new goods. Madden described the data as disappointing but said it was not as negative as the headline number suggested.

    The S&P/TSX composite index fell 161.97 points to 34,339.99.

    In New York, the Dow Jones industrial average dropped 521.28 points to 48,977.92. The S&P 500 fell 29.98 points to 6,878.88, while the Nasdaq composite lost 210.17 points to 22,668.21.

    U.S. markets were pressured as investors continued to punish companies seen as vulnerable to disruption from artificial intelligence. Software stocks and other firms perceived as potential losers in the AI transition faced renewed selling.

    Block added to market anxiety after CEO Jack Dorsey announced the company would cut nearly half of its workforce as part of an AI-driven restructuring.

    Inflation data also weighed on sentiment after a report showed wholesale inflation in the United States rose 2.9 per cent last month, far above the 1.6 per cent economists had expected.

    Oil prices surged amid escalating tensions between the United States and Iran over Tehran’s nuclear program. The April crude oil contract gained US$1.81 to settle at US$67.02 per barrel, reflecting fears that any conflict in the Middle East could disrupt global oil supplies.

    The Canadian dollar traded at 73.30 cents US compared with 73.06 cents US on Thursday.

    Gold prices also jumped as investors sought safe-haven assets, with the April gold contract rising US$53.70 to US$5,247.90 an ounce.

  • Wall Street Strategists Look Beyond AI for Continued S&P 500 Rally

    Wall Street’s 2025 forecasts for the S&P 500 suggest the index will maintain its upward momentum over the next 12 months, but artificial intelligence (AI) is no longer the centerpiece of these predictions. This marks a shift from the AI-driven rally that characterized market calls since Nvidia’s groundbreaking earnings report in early 2023 sparked a bullish surge.

    Broader Market Trends Emerge

    BMO Capital Markets’ chief investment strategist Brian Belski recently set a 2025 year-end target of 6,700 for the S&P 500, while Morgan Stanley’s chief investment officer Mike Wilson issued a 12-month target of 6,500. Notably, both strategists have moved away from heavy reliance on AI as a primary driver of stock market gains. Instead, they are focusing on a broader rally that extends beyond the tech sector.

    Wilson highlighted expectations for continued broadening of earnings growth, supported by anticipated Federal Reserve rate cuts and improving business cycle indicators. Similarly, Belski pointed to data showing an increasing number of stocks outperforming the S&P 500, with 276 stocks doing so in the second half of 2024—a significant improvement over the 10-year average of 238.

    A Matured Bull Market

    This broader rally may lead to slightly weaker overall gains for the index compared to recent years, as smaller gains in non-tech companies contribute less to the index’s total growth. Historical analysis by Belski shows that when the top 100 stocks in the S&P 500 outperform, the index delivers an average annual return of 11.8%, compared to 8% when those stocks underperform.

    While this suggests the rally may appear less dramatic than the AI-driven surge of 2023 and 2024, strategists believe the market remains positioned for solid growth.

    AI’s Continued Role in Market Outlook

    Although AI is no longer a dominant theme in baseline forecasts, its potential impact has not been dismissed entirely. Evercore ISI’s Julian Emanuel recently projected the S&P 500 could reach 6,600 by mid-2025, fueled by renewed public speculation and optimism around AI. Wilson also presented a bullish scenario in which widespread AI adoption boosts corporate margins, potentially pushing the index toward 7,400.

    The Bigger Picture

    Wall Street’s evolving market narrative reflects growing confidence in a diversified rally driven by improving economic fundamentals. While AI remains a promising catalyst, strategists believe the market can sustain its upward trajectory without relying solely on it. Whether AI continues to lead or takes a backseat, the outlook for investors remains optimistic.

    Source : Swifteradio.com