Market Correction Hits Toronto Exchange as Profit-Taking Dominates; S&P/TSX Tumbles 1.23%

The Canadian equity market experienced a significant pullback on Thursday, with the S&P/TSX Composite Index declining 371.86 points to close at 29,906.55—a 1.23% drop. The retreat reversed earlier gains sparked by Nvidia’s robust third-quarter earnings announcement, as market participants shifted focus toward realizing profits rather than chasing further upside. This selloff underscores a broader reassessment of valuations, particularly within the technology sector where elevated AI-related investments have fueled concerns about sustainability.

Profit-Taking Emerges Post-Nvidia Rally

Following Nvidia’s strong earnings beat, technology stocks initially climbed on renewed investor confidence regarding AI’s commercial viability. However, this momentum proved short-lived. Traders quickly pivoted to securing gains, resulting in a broad-based market tumble across most sectors. The Technology sector bore the brunt of selling pressure, declining 2.55%, as growth-focused investors rebalanced positions. Materials stocks also faced considerable headwinds, sliding 4.48%, while IT, Healthcare, Industrials, and Communication Services all posted losses ranging from 0.66% to 0.98%. Consumer Staples emerged as the lone bright spot among the 11 major sectors, posting a modest 0.87% gain.

Economic Data Shifts Rate Cut Expectations

Thursday’s non-farm payrolls data injected fresh complexity into monetary policy discussions. Employment rose by 119,000 positions in September—substantially outpacing expectations of 50,000 and marking the largest five-month increase. The unemployment rate, however, edged up to 4.4% from 4.3% in August, creating a mixed economic picture. This divergence prompted investors to reassess Federal Reserve rate-cut probabilities, with CME FedWatch Tool now indicating just a 39.8% likelihood of a 25-basis-point cut at the December 9-10 FOMC meeting.

Meanwhile, Canada’s monetary authorities have signaled diminishing room for stimulus. Bank of Canada Governor Tiff Macklem recently emphasized that rate adjustments have reached practical limits in supporting economic expansion. Deputy Governor Nicolas Vincent reinforced this view, stressing that long-term affordability improvements hinge on productivity gains rather than interest-rate reductions. Market economists increasingly view near-term rate cuts as unlikely, positioning Canada’s policy stance as effectively neutral.

Domestic Economic Indicators Show Mixed Signals

Statistics Canada released October industrial producer pricing data revealing a 1.5% month-over-month increase and a 6.0% year-over-year rise—suggesting underlying inflationary pressures persist. Conversely, the Canadian Federation of Independent Business reported its Business Barometer long-term index surged to 55.5 in November from an upwardly revised 46.7 in October, indicating strengthening business sentiment among small enterprises.

Geopolitically, Prime Minister Mark Carney advanced Canada’s economic diversification strategy through an official U.A.E. visit aimed at reducing dependency on U.S. markets amid tariff pressures. With over 150 Canadian companies operating regionally, the Middle East represents a strategic growth corridor.

Individual Movers Reflect Sector Divergence

Among declining equities, significant losses emerged in precious metals and technology-adjacent names: Lundin Gold Inc (8.42%), Discovery Silver Corp (7.99%), Ngex Minerals Ltd (7.66%), Celestica Inc (9.50%), Dye & Durham Ltd (4.91%), and Lightspeed Commerce (4.22%). Consumer staples demonstrated resilience, with Metro Inc (1.55%), Loblaw CO (1.37%), Alimentation Couche-Tard Inc (1.19%), and Canada Packers Inc (1.17%) posting gains. Other market-moving names included Altus Group Ltd (5.42%), Curaleaf Holdings Inc (1.86%), and Dollarama Inc (1.68%).