TORONTO — Extreme weakness at Netflix infected the technology sector and pushed Canada's main stock index slightly lower midweek while the loonie rose on hot inflation data.
The S&P/TSX composite index closed down 20.44 points to 21,998.38.
In New York, the Dow Jones industrial average was up 249.59 points at 35,160.79. The S&P 500 index was down 2.76 points at 4,459.45, while the Nasdaq composite was down 166.59 points at 13,453.07.
The mood for growth sectors such as technology soured as Netflix shares plunged 35 per cent after it reported Tuesday night that it lost 200,000 subscribers in the first quarter, its first loss in more than a decade.
Mike Archibald, vice-president and portfolio manager with AGF Investments Inc., said Netflix put pressure on other tech names, especially those that had already been under a lot of stress.
In Canada, Shopify Inc. slumped 13.9 per cent while Lightspeed Commerce Inc was 6.2 per cent lower as the tech sector was the biggest laggard on the TSX by losing 5.4 per cent.
Companies that scored big benefits from COVID-19 are facing a big unwind for a second quarter in a row as growth is slowing, Archibald said.
"It just begs the question for some of the other kind of high-flying, expensive, growthier names what kind of multiple should we expect and what are the financials going to look like going forward," he said in an interview.
"A lot of those numbers have already been cut by the street. But as we saw with Netflix last night, as we may see with others, perhaps they haven't been cut enough and so that's the big worry today, I think."
Health care was down 2.6 per cent as several cannabis names were lower, led by Tilray Inc., which lost 8.3 per cent.
Energy was the best performing sector on the TSX, outpacing crude oil prices that faced a big drop in U.S. stockpiles last week. There was a draw of 8 million barrels compared with an expected build of 3.1 million barrels.
The June crude contract was up 14 cents at US$102.19 per barrel and the May natural gas contract was down 23.9 cents at US$6.94 per mmBTU.
Meg Energy Corp. increased 4.5 per cent as shares of several energy producers bounced back from Tuesday's selloff.
Energy supplies remain a big concern along with elevated inflation and a high level of uncertainty about the war between Russia and Ukraine.
"All those things are still putting an upward pressure and interest on the broader stocks irrespective of kind of what the commodity is doing," Archibald said.
Demand is picking up, notwithstanding COVID lockdowns in China.
"I still continue to think that momentum is in this part of the market, and on days when they sell off they tend to have good rallies in the following days."
Communications was the second-best performer as Rogers Communications Inc. shares rose 3.1 per cent after reporting strong quarterly results that beat expectations.
Materials, which includes metal producers, fertilizer companies and forest products firms, bounced back Wednesday to end the day slightly higher despite lower metal prices as shares of West Fraser Timber Co. Ltd. surged 9.6 per cent after it announced a sizable share buyback with its excess cash.
The June gold contract was down US$3.40 at US$1,955.60 an ounce and the May copper contract was down 6.6 cents at US$4.65 a pound.
The Canadian dollar traded for 79.99 cents US compared with 79.21 cents US on Tuesday.
It was helped by inflation hitting 6.7 per cent last month, the fastest annual increase in more than three decades.
"The thinking there is just the door is open now for more aggressive hiking by the Bank of Canada," Archibald said.
Federal Reserve chairman Jerome Powell will provide his last public comments Thursday before the central bank announces an expected 50 basis point rate hike next month.
This report by The Canadian Press was first published April 20, 2022.
Companies in this story: (TSX:MEG, TSX:SHOP, TSX:LSPD, TSX:TLRY, TSX:WFG, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
