Canada’s S&P/TSX loses 736.13 points in sell-off led by AI fears

Key Facts

The S&P/TSX Composite ended the Nov. 5 session down 736.13 points, or 2%, at 35,605.27 points, its biggest daily drop since June 5, according to Reuters. The decline came as a sharp sell-off swept Wall Street, led by stocks tied to building AI data centers, according to the Associated Press. The Nasdaq fell 5.5%, while the Dow Jones dropped more than 1,800 points. The pressure spread to Toronto as Canadian technology stocks declined, in a session that showed the widening impact of the U.S. sell-off on the Canadian market. The Canadian index’s loss was its biggest in nearly five months.

Part of the Canadian decline was concentrated in the technology sector, which fell 3.8% during the session. Shares of electronics equipment maker Celestica dropped 12.7%, according to Reuters. Gildan Activewear shares also fell 18.9% after its quarterly results came in below expectations. The moves showed uneven pressure across the market, as the sell-off in technology stocks coincided with a sharp decline in a company whose quarterly results disappointed. Reuters did not report an aggregate figure for losses in other sectors.

Sadik Adatia, chief investment officer at BMO Global Asset Management, said “the market is seeing some jitters in the technology sector.” He added that the selling reflected rotation between sectors, not a broader retreat from equities. Adatia’s assessment puts the technology decline in the context of shifting investor preferences among sectors. His comments came as stocks tied to data-center infrastructure, which had been at the forefront of the U.S. sell-off, declined. Adatia did not describe the move as a broad exit from equities.

In the United States, the Associated Press said concerns about the possibility of restrictions on data centers intensified after Democratic victories in the midterm elections. The news agency linked those concerns to the Nasdaq’s 5.5% decline on Nov. 5 and the sell-off led by stocks tied to the expansion of AI infrastructure. The losses followed a strong session the previous day, when the S&P 500 rose 1.6% on Nov. 4, posting its best daily performance in three months. The Dow Jones also rose 1,569 points, or 3%, that day. The previous session’s gains were erased as volatility returned to U.S. stocks and the decline spread to the Canadian market.

Against the backdrop of U.S. economic data, initial jobless claims fell to 189,000 in the week ended Oct. 31, from 195,000 the previous week, according to the Associated Press. The reading was the lowest since mid-July, while the four-week average of claims fell to 194,750. The figures put labor data in the context of the session, but they do not establish a direct cause of the Toronto index’s decline. The sources did not link the TSX’s decline to this data or to productivity figures. The sources identified the sell-off’s driver as concerns about the technology sector and AI data centers.