Why the TSX Fell 1.7% While Wall Street Barely Moved
The S&P/TSX Composite closed Wednesday, October 7, at 35,041.86, down 1.70% or 607.64 index points, while the S&P 500 lost 0.22% to 7,801.77. The gap between Toronto and New York was 0.77 of a percentage point at 10:20 a.m. and 1.48 percentage points at the close, because Wall Street recovered through the rest of the session and Toronto did not.
Two sectors took three quarters of the decline
Our attribution multiplies each constituent’s price return by its iShares fund weight and sums by sector: XIC for the TSX, and XUS, an IVV look-through renormalised to 100, for the S&P 500 column, both dated October 6. It covers 99.77% of the index and models the day at -169.9 basis points against a printed -170.4 bp. A basis point is one hundredth of a percentage point.
| Sector | TSX wt% | S&P 500 wt% | Sector return | Contribution |
|---|---|---|---|---|
| Financials | 33.93 | 11.30 | -2.30% | -78.0 bp |
| Materials | 18.28 | 1.60 | -2.88% | -52.6 bp |
| Energy | 16.34 | 3.43 | -1.32% | -21.5 bp |
| Industrials | 10.00 | 8.07 | -1.65% | -16.5 bp |
| Information Technology | 9.14 | 40.18 | -0.15% | -1.4 bp |
| Consumer Discretionary | 2.90 | 8.63 | -0.47% | -1.4 bp |
| Utilities | 3.27 | 1.93 | -0.26% | -0.9 bp |
| Real Estate | 1.19 | 1.65 | -0.56% | -0.7 bp |
| Health Care | 0.31 | 8.98 | +0.77% | +0.2 bp |
| Communication | 1.41 | 9.84 | +0.69% | +1.0 bp |
| Consumer Staples | 2.95 | 4.38 | +0.58% | +1.7 bp |
Financials and materials together are -130.6 bp of that -169.9, or 76.9%. They are 52.21% of the TSX and 12.90% of the S&P 500. Breadth was thin: 42 of the 216 members closed higher.
Sector weights and contributions at Wednesday’s close, stamped 4:17 p.m. ET.
The same sector returns would have lifted an American index
Hold the TSX’s own sector returns where they landed and swap in the S&P 500’s weights, and the Canadian index falls 0.44% instead of 1.70%. So of the 1.48 percentage point gap, 1.26 points is weighting, about 85% of it, and the rest is the sectors themselves not moving identically. The calculation varies only the weights, so it measures composition rather than either market.
The sharper version is the window after 10:20 a.m. The index chained -37.1 bp over those hours and our model of it -36.7 bp, against the +23.0 bp the same returns produce at S&P 500 weights, and the S&P 500’s own +35.2 bp. Composition did not amplify a shared decline. It reversed the sign.
The five largest sectors by weight, chained from the two snapshots, our arithmetic:
| Sector | Return after 10:20 | Contribution |
|---|---|---|
| Information Technology | +0.94% | +8.6 bp |
| Materials | -0.10% | -1.8 bp |
| Industrials | -0.65% | -6.5 bp |
| Energy | -0.92% | -15.1 bp |
| Financials | -0.67% | -22.7 bp |
Information technology was the largest of four sectors to improve, all of it Shopify: +1.77% after 10:20 a.m. for +9.8 bp, more than the sector’s +8.6 bp, which leaves the rest of Canadian tech a net drag. It closed +1.22%, the day’s largest positive contributor at +6.8 bp. Communication gained too, and it is 9.84% of the S&P 500 against 1.41% of the TSX, part of why the counterfactual turns positive.
Six bank stocks were more than a third of the day
| Bank | Fund weight | Return | Contribution |
|---|---|---|---|
| Royal Bank | 7.61% | -2.28% | -17.4 bp |
| Toronto-Dominion | 5.44% | -3.35% | -18.2 bp |
| Bank of Nova Scotia | 3.07% | -3.08% | -9.5 bp |
| Bank of Montreal | 3.25% | -2.32% | -7.5 bp |
| CIBC | 2.85% | -2.57% | -7.3 bp |
| National Bank | 1.54% | -2.70% | -4.2 bp |
Those weights foot to 23.76% of the index and the contributions to -64.1 bp, 37.7% of the modelled total, in a band from -2.28% to -3.35%, tight enough to read as a sector repricing rather than anything particular to one bank.
Which to hold through a repricing is a different question from which fell hardest, and we rank the six on capital, payout and loan book in Best Canadian Bank Stocks: The Big Six and Beyond.
Materials fell with gold, and not only with gold
Gold fell 1.34% to $4,130.90 and 59 of the 60 materials names closed lower. Its four largest negative contributors are all precious metals: Agnico Eagle (2.64% weight, -2.79%, -7.4 bp), Barrick Mining (1.88%, -3.64%, -6.9 bp), Wheaton Precious Metals (1.75%, -2.70%, -4.7 bp) and Franco-Nevada (1.32%, -2.22%, -2.9 bp), which is -21.9 bp between them, 41.6% of the sector’s -52.6. Agnico Eagle and Barrick were the two largest drags on the day outside the financial sector. The base metals and fertiliser names went too: Teck Resources -2.22%, First Quantum -3.58%, Nutrien -1.50%.
The producers turned with the oil price
WTI settled lower, the November contract at $88.24 in the settlement window, down $1.17 or 1.31% from $89.41 on October 6 (NYMEX WTI, November contract, settlement-window price from Yahoo Finance trade data). Producers that held gains at 10:20 a.m. gave them back: Canadian Natural from +0.10% to -0.99%, Cenovus from +0.40% to -1.78%, Imperial Oil from +0.35% to -2.03%, and Suncor from +1.03% to a thinner +0.22%. Cameco, which the index classifies in energy rather than materials, fell 4.01% for -4.5 bp.
This was not a Canadian rate story
No Canadian data release and no Bank of Canada event. Canada’s curve had eased into the session. Over the week to October 6 the Government of Canada 2-year went to 3.23% from 3.37% and the 10-year to 3.92% from 3.99%, the latest reading in the Bank of Canada’s Canadian benchmark bond yields feed, a business day behind. The US 2-year fell to 4.79% from 4.89% over the same week and the 10-year rose a basis point to 5.27%, on the Treasury’s own daily yield curve. Real estate at -0.56% and utilities at -0.26% were among the day’s mildest sectors, which is not how a Canadian rate shock looks.
The Federal Reserve released the minutes of its September 15-16 meeting at 2:00 p.m. ET, inside the window where Toronto pulled away. The committee had raised that month to a target range of 3.75 to 4.00 percent: “most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.” We read them in Fed Minutes: The Committee Raised on Two Readings of August. Both Have Changed Since.; the payroll figures underneath that decision were revised down on October 2. The rate market did not then reprice the way that reading implies: on the day the US 2-year eased to 4.77% while the 10-year went to 5.28% and the 30-year to 5.67%, a steepening rather than a repricing of the front end. We can measure precisely what fell in Toronto. We cannot pin why.
What the close says about owning the index
The asymmetry is not new, and this year it is the norm: of the 63 sessions in 2026 when both indexes fell, the TSX fell more on 36, 57.1%, against 329 of the 815 shared down days from 2016 through 2025, 40.4%. The close is 5.18% below the 2026 closing high of 36,957.60, set on August 25, on our arithmetic on daily closes.
A Canadian holder lived a wider gap than that. The US dollar rose to 1.4257 Canadian from 1.4226 on the Bank of Canada’s daily rate, a 0.22% easing in the Canadian dollar, which on our arithmetic leaves the S&P 500’s -0.22% flat in Canadian dollars at 0.00%. The gap was 1.70 percentage points, not 1.48.
A reader whose Canadian exposure is one broad TSX fund owns this concentration every day, which is the lens we rank funds through in Best Canadian ETFs: Ranked on What Reaches You.
Aritzia reports Thursday October 8, after closing up 1.68%. Statistics Canada publishes September’s Labour Force Survey on Friday October 9. The Fed meets October 27-28, the Bank of Canada decides October 28.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Index levels and the S&P 500 close are Yahoo Finance readings for the October 7, 2026 session. Sector and constituent contributions are each holding’s iShares fund weight times its own price return, summed by sector, from the iShares XIC and XUS holdings files dated October 6, 2026, covering 99.77% of the S&P/TSX Composite by weight; the chart and every basis point figure come from that calculation at 4:17 p.m. ET. The comparison holding Canadian sector returns at American sector weights, the chained returns after 10:20 a.m., the Canadian-dollar return of the S&P 500 and the shared-down-day frequencies since 2016 are our own calculations on those files and on daily closes. The WTI price is the November contract’s settlement-window price, the volume-weighted price of trades from 2:28 to 2:30 p.m. ET, rebuilt from Yahoo Finance trade data. Canadian benchmark bond yields and the daily US dollar exchange rate are the Bank of Canada’s own series; the feed for bond yields runs one business day behind, so October 6 is the latest reading. US Treasury par yields are the Treasury’s own daily yield curve. The quotation is from the Federal Reserve’s published minutes of the September 15-16, 2026 meeting.
