Financial stocks pull S&P/TSX composite lower, U.S. markets weighed down by big tech

TORONTO – Canada’s main stock index finished in negative territory, while U.S. markets lost ground amid AI-related concerns among some investors.

Sadiq Adatia, chief investment officer at BMO Global Asset Management, said there were three main factors investors were concerned about in the market.

“One is still the AI story and concerns about … the spending, the valuations, and the potential benefits coming out of that,” he said.

Secondly, he noted there is some uncertainty around the U.S. Federal Reserve and its succession plan for its current chair, Jerome Powell, whose term ends in May.

Thirdly, he said there is likely some profit-taking and selling going on for tax reasons heading into the end of the year.

Going forward, he said the last five days of the year tend to be a “more bullish rally” in the stock market.

On the S&P/TSX composite on Wednesday, losses in the financial sector outweighed gains in energy and basic materials. Adatia said there might have been some profit-taking impacting financials.

“There’s nothing fundamentally that we look and see under the hood that’s causing this sort of decline in the financials,” he said.

Additionally, Adatia noted that the basic materials sector benefited from higher gold prices. The February gold contract was up US$41.60 at US$4,373.90 an ounce.

“The materials sector has all done really well this year. We continue to see that doing well next year. The volatility you’re seeing in markets is good for those segments of the market,” he said.

“You’re seeing them being a good hedge against that.”

The TSX was down 13.91 points at 31,250.02.

In New York, the Dow Jones industrial average was down 228.29 points at 47,885.97. The S&P 500 index was down 78.83 points at 6,721.43, while the Nasdaq composite was down 418.14 points at 22,693.32.

More drops for AI stocks dragged the U.S. market lower Wednesday, and Wall Street sank to its fourth straight loss.

Slightly more stocks rose within the S&P 500 than fell, but they got drowned out by the declines in companies in the artificial-intelligence industry.

Questions continue to dog the former superstars about whether their yearslong dominance of Wall Street meant their prices shot too high, as well as whether all the investment in AI will produce enough profit and productivity to prove worth the cost. Worries are also rising about the debt that some companies are taking on to pay for it all.

“There are a lot of bears in the space, looking at all this capex spending. What is the gain coming out of it?” Adatia said.

He added that some of the key hyperscalers are able to showcase gains in productivity.

Broadcom dropped 4.5 per cent, Oracle fell 5.4 per cent and CoreWeave sank 7.1 per cent. Nvidia, the chip company that’s become Wall Street’s most influential stock because of its tremendous size, fell 3.8 per cent and was the day’s heaviest weight on the S&P 500.

The Canadian dollar traded for 72.56 cents US compared with 72.74 cents US on Tuesday.

The February crude oil contract was up 68 cents US at US$55.81 per barrel.

This report by The Canadian Press was first published Dec. 17, 2025.

— With files from The Associated Press.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)