Canadian Stocks Tumble To Three-Month Lows Amid Interest Rate Worries

(RTTNews) - Following the uptick seen in the previous session, Canadian stocks showed a substantial move back to the downside during trading on Tuesday.

The benchmark S&P/TSX Composite Index plunged 244.46 points or 1.2 percent to 19,556.15, tumbling to its lowest closing level in three months.

The sharp pullback on Bay Street came amid ongoing concerns about the outlook for U.S. interest rates, with JPMorgan Chase (JPM) CEO Jamie Dimon warning in an interview with The Times of India that rates could go as high as 7 percent.

"I am not sure if the world is prepared for 7%," Dimon said. "I ask people in business, 'Are you prepared for something like 7%?' The worst case is 7% with stagflation."

"If they are going to have lower volumes and higher rates, there will be stress in the system," he added. "We urge our clients to be prepared for that kind of stress."

Minneapolis Federal Reserve President Neel Kashkari also wrote in an essay posted on Tuesday that there is a 40 percent chance the Federal Reserve will have to push rates "meaningfully higher" to combat stubborn services inflation.

Last week, the Fed left interest rates unchanged as widely expected but forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.

Healthcare stocks showed a substantial move to the downside on the day, resulting in a 2.5 percent nosedive by the S&P/TSX Capped Health Care Index.

Significant weakness was also visible among interest rate-sensitive real estate stocks, with the S&P/TSX Capped Real Estate Index plunging by 2.3 percent.

Telecom, materials and utilities stocks also saw considerable weakness, while energy stocks bucked the downtrend amid a rebound by the price of crude oil.