The S&P/TSX Composite index fell by approximately 0.6%, dropping below 28,420 on Tuesday. This decline follows the record highs reached just before the long weekend, as investors reassessed their positions in the face of fresh macroeconomic data. The technology sector was a key driver of this downturn, with Shopify seeing a decline of over 2%. This decline came as traders reduced their holdings in growth-oriented stocks after the weekend reignited concerns about high valuations, particularly for companies linked to AI software and hardware, thus opening opportunities for profit-taking.
Beyond the tech sector, the broader market downturn mirrored a cautious stance in anticipation of upcoming Canadian and U.S. labor reports. These reports are expected to impact the monetary policy decisions of both the Bank of Canada and the Federal Reserve. Additionally, Canada's August Manufacturing PMI rose to 48.3 from 46.1 in July, although it remained below the 50-point threshold that indicates expansion. This marks the seventh consecutive month of contraction, reflecting ongoing challenges for manufacturers, which market analysts attribute to weaker external demand, trade disruptions, and rising input costs.
