04:21 PM EDT, 07/08/2025 (MT Newswires) -- The Toronto Stock Exchange closed lower for a second day on Tuesday, falling back below the 27,000 mark as investors take profits following Friday's record close.

The S&P/TSX Composite Index closed down 116.71 points to 26,903.57, again dropping off Friday's record close of 27,036.16. Energy and Industrials were the biggest gainers, rising 5.3% and 2.8%, respectively. Decliners were led by Information Technology, which dropped 3.3%.

Avery Shenfeld, chief economist at CIBC Capital Markets, said in a podcast the investment bank agrees with President Trump that the United States may need lower interest rates to sustain full employment, especially as tailwinds like strong consumer spending and immigration fade. He added that while cuts may be needed later, the Federal Reserve is in a wait-and-see mode due to low unemployment and lingering inflation risks, including the unknown impact of new tariffs.

Shenfeld also said that unlike the United States, Canada is not at full employment "and there's a greater urgency then that if the economy needs interest rate relief, we should be providing it somewhat sooner". He added that labor market softness in Canada appears to be spreading beyond trade-sensitive sectors, according to more detailed payroll data, raising concerns about underlying weakness.

Taylor Schleich, Director, Economics and Strategy at National Bank Financial, and analyst Noah Black said in a Tuesday note the Bank of Canada has cut interest rates by 2.25 percentage points since starting its easing cycle in June 2024. But despite this, longer-term borrowing costs, like 10-year bond yields, have barely moved. This "paltry" pass-through means the impact of rate cuts on the broader economy has been limited.

They added that muted pass-through of rate cuts is not just a Canadian issue, bond yields have been rising globally, partly due to concerns over growing fiscal pressures and anxieties. Canada has fared better than some countries, like the U.K. "However, relative fiscal strength should not distract from the fact that deficits and debt loads are rising in Canada too. That isn't conducive to absolute yield relief, leaving governments, businesses and consumers facing higher borrowing costs than they otherwise might," the note said.

West Texas Intermediate (WTI) crude oil closed higher for a third-straight session on Tuesday as the market weighs the impact of higher supply after OPEC+ over the weekend decided to boost production more than expected next month. WTI crude oil for August delivery closed up US$0.40 to settle at US$68.33 per barrel, while September Brent crude was last seen up US$0.77 to US$70.35.

Gold traded lower late afternoon on Tuesday as U.S. President Donald Trump renewed tariff threats against the country's trading partners while again delaying imposing the levies, while the dollar and yields rose. Gold for August delivery was last seen down US$30.10 to US$3.312.70 per ounce.