Canada’s main stock index finished lower, while U.S. markets also retreated amid a selloff in technology stocks on both sides of the border.
Allan Small, a senior investment adviser at iA Private Wealth Inc., said an overriding theme has taken hold of the market, which hasn’t appeared since April. With markets moving higher for a few months now, he said investors are pausing to consider whether stocks are overvalued.
“The market is taking a look right now, at least today and in the last couple of days, that the market is overvalued and it’s being led by a bit of a tech sell-off,” Small said.
In particular, he noted investors are asking questions about AI spending and if it is making a difference for businesses that are spending billions of dollars on the technology.
“Big tech names like Oracle and others that have had tremendous runs in the last month, is that justified?” Small said.
The S&P/TSX composite index was down 24.97 points at 29,731.98.
In New York, the Dow Jones industrial average was down 173.96 points at 45,947.32. The S&P 500 index was down 33.25 points at 6,604.72, while the Nasdaq composite was down 113.16 points at 22,384.70.
“I think the markets are just having a bit of a pullback, which I fully anticipate will be bought at some point,” Small said.
Within Canada’s tech sector, Constellation Software Inc. shares slid 5.95 per cent on Thursday.
The company said its founder, Mark Leonard, has resigned effective immediately as president for health reasons. Small noted that while the stock was likely moving lower partly due to the broader tech selloff, markets generally react negatively to any uncertainty around management.
He also noted that seasonal factors may be weighing on the market.
“Historically, the last couple of weeks of September tend to be quite poor for the markets, and so perhaps you’re seeing a bit of a sell-off based on that,” Small said.
Meanwhile, he said relative strength in the U.S. economy may alter the path of interest rates south of the border.
An uptick in U.S. consumer spending helped the nation’s economy expand at a surprising 3.8 per cent from April through June, the government reported in a dramatic upgrade of its previous estimate of second-quarter growth.
Small said that if inflation remains around three per cent in the U.S. and its economy continues to be strong, it would be difficult for the U.S. Federal Reserve to continue to lower borrowing costs.
“Maybe you’d see one more cut, but I’d be surprised if you see more than that,” he said.
The Canadian dollar traded for 71.80 cents US compared with 71.98 cents US on Wednesday.
The November crude oil contract was down one cent US at US$64.98 per barrel. The December gold contract was up US$3.00 at US$3,771.10 an ounce.
— With files from The Associated Press.
This report by The Canadian Press was first published Sept. 25, 2025.