S&P/TSX composite down Tuesday on energy, metals and financials; U.S. markets slide

Powell indicated the central bank could increase the size of its rate hikes and take rates higher than previously indicated if the data continues to show a strong economy. 

Canada’s main stock index fell more than one per cent Tuesday with losses in energy, metals and financials leading the way down, while U.S. markets fell further.

The S&P/TSX composite index was down 239.26 points at 20,275.54.

In New York, the Dow Jones industrial average was down 574.98 points, or 1.72 per cent, at 32,856.46. The S&P 500 index was down 62.05 points, or 1.53 per cent, at 3,986.37, while the Nasdaq composite was down 145.41 points, or 1.25 per cent, at 11,530.33.

The market reacted strongly to comments by Federal Reserve chairman Jerome Powell made in Washington as part of a two-day testimony by the central bank leader, said Kevin Headland, chief investment strategist at Manulife Investment Management.

Powell indicated the central bank could increase the size of its rate hikes and take rates higher than previously indicated if the data continues to show a strong economy.

With less optimism than investors perhaps hoped for, equity markets took a dive alongside commodities, in a day that was a far cry from January’s rally.

“It’s interesting how once again the market had expected, I think, the Federal Reserve to not maintain the same tone they have been since last year, and they’ve been wrong each time,” Headland said.

“They continue to say they’re fighting inflation.”