The S&P/TSX Composite Index fell over 0.5% to trade near 35,500 on Wednesday after closing at a record high in the previous session, as investors assessed the Federal Reserve's latest policy decision.
The Fed left interest rates unchanged, as expected, but three FOMC members favored a rate hike.
Also, oil prices extended gains as tensions in the Middle East escalated following joint US-Saudi strikes in Iraq, fueling inflation concerns.
Bond yields moved higher, pressuring banks and the broader index.
RBC, TD Bank, BMO, CIBC, and Scotiabank each lost about 2%.
In contrast, mining stocks rebounded alongside gold prices.
Agnico Eagle and WPM gained about 1%, while Franco-Nevada rose 2%.
Energy stocks also advanced on stronger crude prices, with Canadian Natural and Cenovus adding nearly 4% each.
Cenovus also reported stronger second-quarter revenue and profit.