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TORONTO — North American stock markets fell Tuesday even though weaker U.S. inflation numbers could delay Federal Reserve action to taper stimulus. 

Craig Jerusalim, portfolio manager at CIBC Asset Management, said markets were "taking a breather" with no obvious catalyst to drive them higher.

"When you have elevated valuations, markets often need good news to continue to go higher, so lack of good news is probably the main reason today," he said in an interview.

Consumer Price Index data was benign, coming in a tad better than expected and below the torrid pace of earlier months. Inflation rose 0.3 per cent month over month in August, shy of the 0.4 per cent consensus forecast.

Stripping out volatile food and energy, it was up 0.1 per cent, compared with the forecast for about 0.3 per cent. That's four per cent on an annualized basis, versus an expected 4.2 per cent.

Last month's inflation numbers were good for markets but not good enough to prompt a lift, Jerusalim said.

"This news does not settle the inflation debate quite yet, but it does give a little bit of a nod towards the transitory side of the debate. And it does take some pressure off the Fed to act and maybe pushes back the tapering decision to December instead of November." 

The S&P/TSX composite index closed down 113.16 points to 20,553.25 for the largest drop in a month.

In New York, the Dow Jones industrial average was down 292.06 points at 34,577.57. The S&P 500 index was down 25.68 points at 4,443.05, while the Nasdaq composite was down 67.82 points at 15,037.76. 

Energy was among eight sectors that decreased on the TSX.

It lost 1.3 per cent even though crude oil prices were flat and natural gas was higher.

The October crude contract was up one cent at US$70.46 per barrel and the October natural gas contract was up 2.9 cents at US$5.26 per mmBTU. 

Cenovus Energy Corp. lost 2.9 per cent while Suncor Energy Inc. was nearly two per cent lower.

China released some crude from its strategic reserves, which likely offset the impact on prices from lingering disruptions caused by hurricane Ida and tropical storm Nicholas, which is battering the Gulf Coast.

The Canadian dollar traded for 78.98 cents US, unchanged from Monday. 

Health care, telecommunications, industrials and technology were among the laggards.

Materials got a lift from gold prices and talk of sector acquisitions by Barrick Gold's CEO at the Denver Gold Show.

Teck Resources Ltd. rose 4.7 per cent after published reports suggested the company is exploring options for its $8-billion metallurgical coal unit, which Jerusalim suggested could be packaged with its other carbon intensive assets.

The December gold contract was up US$12.70 at US$1,807.10 an ounce and the December copper contract was down 4.6 cents at US$4.32 a pound. 

"Gold can work during periods of inflation, periods of deflation or periods of excess risk, and so right now it's a combination of gold being ... an underperformer and also the heightened risk of a policy misstep by the Fed."

This report by The Canadian Press was first published Sept. 14, 2021. 

Companies in this story: (TSX:CVE, TSX:SU, TSX:TECK.B, TSX:ABX, TSX:GSPTSE, TSX:CADUSD=X) 

Ross Marowits, The Canadian Press