The S&P/TSX Composite fell 607.65 points, or 1.70%, to 35,041.86 on Wednesday, its lowest close since July 20, according to The Canadian Press. It was the steepest one-day drop in the 22 sessions since September 9, deeper than the 1.61% loss on September 23. Thursday brought a 0.27% gain to 35,136.47, which recovered 94.61 points, or 16% of the loss.
The index closed 4.9% below its August 25 close of 36,957.63 and 0.7% below its 10-day average of 35,399. Reuters reported on October 5 that the TSX was up nearly 12% for 2026, with energy the best-performing sector, which is the cushion the October 7 drop cut into.
Why Materials Led the Drop and Energy Led the Bounce
The Canadian Press attributed the October 7 loss to basic materials. December gold fell US$46.40 to US$4,140.70 an ounce at midday, and Motley Fool Canada reported that precious metals fell steeply that day, with silver and copper lower into Thursday. Fortuna Mining fell more than 9% to $14.44 after reporting lower third-quarter production, and Energy Fuels and I-80 Gold each fell at least 7.8%.
Energy moved the other way on October 8. WTI rose 3.64% to US$91.49 on attacks on Middle East crude tankers, and The Canadian Press noted energy strength in its late-morning report, when November crude was up US$4.72 at US$93.00. Gold also stabilized, up US$4.00 to US$4,144.70, and the Canadian dollar traded at 70.26 U.S. cents against 70.14 on Wednesday. A commodity-heavy index is pulled by whichever commodity is moving, and on Thursday oil rose 3.64% while gold gained only US$4.00.
The Bounce Came on the Thinnest Volume of the Window
The TSX closed lower on 12 of the 22 sessions since September 9 and ended 2.1% below its September 9 close of 35,906.56. The October 7 drop came on volume of 250.73 million, in line with the 250 million average of the other sessions once the 628.42 million of September 18 is excluded. The October 8 rebound traded 164.40 million, the lowest of the window.
Volume is as quoted by Investing.com, and the September 18 reading of 628.42 million is a single-session outlier. The period high and low are intraday, the 10-day moving average is computed from closing prices, and the Federal Reserve raised its target range on September 16.
The October 8 low of 34,952.95 held 14.94 points above the October 1 low of 34,938.01, which is the support level that matters on this chart. The test passed, but a gain on volume 34% below average does not confirm a turn. The index needs a close above the 10-day average of 35,399 to show that buyers returned and not only that sellers paused.
The Rate Backdrop Under the Tape
Rate expectations eased through the week. CME FedWatch put the chance of a Federal Reserve hike at its October meeting at 20% on October 5, down from nearly 71% a week earlier, after a softer U.S. payrolls report, according to Reuters. Minutes of the Fed September meeting showed most policymakers still expect another hike before the end of 2026, according to Motley Fool Canada, and LSEG data showed investors expecting at least one more Bank of Canada hike by year end.
The Government of Canada two-year yield was 3.25% on October 8, with the five-year at 3.60% and the ten-year at 3.93%, according to Trading Economics. The Labour Force Survey is due at 8:30 a.m. ET today, U.S. CPI follows on October 14, and the Bank of Canada decides on October 28. Energy deal activity continues in the background: Cenovus agreed to acquire Athabasca Oil at an implied enterprise value of C$5.7 billion, and Suncor agreed to sell three offshore assets to Ithaca Energy for C$1.2 billion in cash, according to Reuters.