TSX at 2-year low, Dow loses another 500 points

New York’s Dow Jones Industrial Average fell 507 points or 2.1 per cent Monday, and the TSX was at a two-year low as investors turned cautious ahead of an expected announcement from the U.S. Federal Reserve.

Oil falls below $50 US as investors await Fed announcement

Trader Steven Kaplan watches the ticker on the floor of the New York Stock Exchange. The Dow was down more than 500 points today. (Richard Drew/Associated Press)

New York's Dow Jones Industrial Average fell 507 points or 2.1 per cent Monday, and the TSX was at a two-year low as investors turned cautious ahead of the U.S. Federal Reserve's monetary policy guidance, expected on Wednesday.

The Federal Reserve is expected to raise U.S. interest rates at the end of its two-day meeting on Wednesday. But investors are hoping the U.S. central bank will indicate it will move more slowly to raise rates in 2019, amid concerns over slowing global growth.

U.S. President Trump tweeted that it was "incredible" that the Fed would consider raising rates when inflation was low, introducing another measure of uncertainty into the market.

The Toronto Stock Exchange S&P/TSX index lost 232 points or 1.6 per cent on the day.and is down 11.4 per cent this year. It ended the day at 14,362 and seems set to end the year in negative territory.

Oil's drop has weighed heavily on the TSX. The North American benchmark contract fell below $50 US today, ending the session at $49.15 US a barrel. That's the lowest since the fall of 2017. Western Canada Select was at $37.38 US.

While excess supply has driven past fluctuations of crude prices, new economic data from China showing that the world's second-largest economy continues to slow caused investors to fret about the weakening global economy, says Craig Fehr, Canadian markets strategist for Edward Jones.

"I think that combination of demand concerns and still high supply levels are what have really pushed oil prices to fresh lows," he told Canadian Press.

Into the red

Bombardier stock fell after a deal was confirmed for Boeing to take over Embraer's commercial aircraft business.

The Dow has had successive drops of 500 points over the past month and ended the day at 23,592, down 4.7 per cent this year. The broader S&P index fell 54 points to 2,545 and the Nasdaq fell 156 points to 6,753.

A measure of small-company stocks fell into a bear market, a decline of 20 per cent below their recent peak.

The market is now well into the red for the year and the S&P 500 index is trading at its lowest level since October 2017.

Technology and consumer stocks were hardest hit. The health-care sector lost ground after a Texas judge ruled that the Affordable Care Act was unconstitutional.

With files from The Canadian Press