04:22 PM EDT, 05/29/2024 (MT Newswires) -- The Toronto Stock Exchange's S&P/TSX Composite Index closed down 330.68 points to 21,934.37 on Wednesday, on concerns stubborn inflation will keep interest rates higher for longer in the United States.

All sectors but one closed lower, the exception being Battery Metals, up 1.6%, with the biggest decliners being Utilities and Financials sector, both down 2.3%.

The market awaits upcoming U.S. inflation data, due Friday, with the release of the Personal Consumption Expenditures Index, the Federal Reserve's preferred inflation measure. The consensus estimate expect the April data to show a rise of 2.7% annualized, according to Marketwatch, unchanged from March and ahead of the Fed's 2% target.

Adding to the negative overall sentiment, Bank of Montreal ( NRGD ) continued a less than stellar fiscal second-quarter earnings season for Canada's big banks, reporting second-quarter adjusted earnings per share of $2.59 versus National Bank's forecast of $2.69 and a consensus forecast of $2.76.

Among key takeaways, National Bank's Gabriel Dechaine noted the main drag on the quarter was credit performance. Provisions for credit losses were 30% above his forecast on the back of a 24% sequential increase in Gross Impaired Loans (GILs), the second big spike over the past three quarters. This forced the bank to re-set credit performance expectations, with BMO guiding to a similar level of loan losses delivered this quarter over the next few quarters. Dechaine added: "Assuming credit performance is maintained at these levels, and operational performance improves as it has since a disappointing Q1/24, we believe short-term stock upside potential is relatively attractive."

BMO is rated Outperform at National Bank, but had its target cut to $136 from $143.

Focus will now turn to the release Thursday of Q2s from both CIBC (CM.TO) and Royal Bank of Canada ( RY ) .

Despite the concerns ahead of key U.S. inflation data due this week, BMO Capital Markets Economics said today's release from the Federal Reserve of the latest Beige Book describes an economy that is "still expanding though slowing."

Bottom line, BMO added, "the depiction of U.S. economic activity expanding at a more modest pace is in harmony with our forecast of slower real GDP growth this year, particularly as consumers cut back on discretionary spending amid still-elevated prices and rates and weaker employment growth."

Of note to Canadian equity market watchers, The Globe and Mail noted that settlements, the "complex undertaking" that ensures money and securities properly change hands every time stocks or bonds are bought or sold, previously had to be completed within two business days of the trade itself. As of Monday, however, settlements now have a single business day to be completed, it reported.

West Texas Intermediate (WTI) crude oil closed lower on Wednesday, dropping as the dollar rose despite expectations OPEC+ will roll current production cuts into the high-demand third quarter, squeezing global inventories. WTI crude oil for July delivery closed down US$0.60 to settle at US$79.23 per barrel, while July Brent crude, the global benchmark, closed down US$0.62 to US$83.60.

Gold traded lower mid-afternoon on Wednesday as the dollar and yields rose ahead of U.S. inflation data coming on Friday. Gold for August delivery was last seen down US$19.90 to US$2,359.40 per ounce.