04:23 PM EDT, 08/01/2024 (MT Newswires) -- The Toronto Stock Exchange closed lower, joining U.S. markets in a sell off as investors took profits after it closed at a record high a day earlier and resource prices fell.

The S&P/TSX Composite index closed down 387.6 points to 22,723.21, with Base Metal issues leading the drop, down 4.1%, while Information Technology fell 3.38% and Energy dipped 2.9%. Battery Metals, up 3.5%, and Telecoms, up 0.6%, were the biggest gainers.

All of North America's major stock indices lost ground on Thursday, with U.S. investors piling into treasuries after weak economic data and Jerome Powell on Wednesday saying U.S. interest-rate cuts could begin in September.

West Texas Intermediate (WTI) crude oil closed lower on Thursday, as concerns over flagging China demand more than offset worries over rising Middle East tensions following the assassination of a leader of the Hamas militant group in Tehran a day earlier. WTI crude for September delivery closed down US$1.60 to US$76.31 per barrel, after earlier touching US$78.88. October Brent crude, the global benchmark, closed down US$1.32 to US$79.52.

Gold traded higher late afternoon,, pushed up by rising geopolitical tensions while U.S. treasury yields fell to the lowest in more than six months after Federal Reserve Chair Jerome Powell indicated the central bank could begin a cycle of interest-rate cuts in September. Gold for December delivery was last seen up US$14.50 to US$2,487.50 per ounce.

Thursday's economics data was almost a side show, although market watchers continue to look for clues on the timing and pace of rate cuts to come across North America.

TD Economics noted the U.S. manufacturing index fell more than expected in July. The bank noted: "After yesterday's FOMC meeting we know rate relief is in sight. The monetary tightening that started two years ago is set to flip to easing, with the first rate cut likely coming in September if the economic data cooperate. For the bruised manufacturing sector the cut will be welcome news, but with interest rate still deeply in restrictive territory, a quick turnaround shouldn't be expected."

TD noted the ISM Manufacturing Index took "another step back" in July, dipping to 46.8 and missing expectations for a slight improvement to 48.8. With only five industries reporting growth for the month, 86% of manufacturing GDP shrank, up from 62% in June and 55% in May, the bank also noted.

BMO Economics for its part said the bottom line is that while the Fed is expected to cut rates in September, manufacturing activity will likely remain muted amid a strong dollar and softer demand for durable goods.

Royce Mendes at Desjardins worried about the impact of a recession on central banks interest-rate cuts.

"Should a downturn take hold and begin to snowball, central bankers will need to cut rates more forcefully than what's accounted for in our base case forecast. That would lead to lower rates across the curve and also a steeper curve, as the policy rate falls further below neutral. For now, we believe central bankers are on the right track and can narrowly avoid a recession, meaning our base case forecast remains the most likely outcome with a recession just a downside risk."