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A broad rally sent North American stocks to a sharply higher close on Thursday, recovering ground lost over recent sessions as market participants snapped up bargains while digesting the implications of a shifting pandemic.

All three U.S. indexes advanced, with investors favoring value over growth, and economically sensitive smallcaps and transports outperforming the broader market. Of the three, the Dow gained the most with Boeing Co providing the biggest lift to the blue-chip industrial average. Canada’s TSX gained 1.45%, although the gold sector was left out of the rally.

“We went 29 days in a row in the S&P 500 without a 1% change, up or down, but boom - Omicron hits and five days we’ve had this blast of volatility,” said Ryan Detrick, chief market strategist at LPL Financial in Charlotte, North Carolina. “Buyers are starting to nibble after the recent weakness and pushed stocks higher, but the uncertainty of Omicron is still out there.”

Robert Kavcic, senior economist with BMO Capital Markets, noted that stocks have been able to rise in the face of pandemic disruptions, but up until now, they have done so with the help of massive fiscal and monetary stimulus. “The difference now is that the latter are pushing up against real inflation constraints (ie policy needs to tighen, not loosen). That could set a more challenging backdrop for stocks,” he said in a note.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 297.43 points, or 1.45%, at 20,762.03, after posting on Wednesday its lowest close since Oct. 12.

Financials, which account for about 30% of the Toronto market’s value, gained 2.2%. Toronto-Dominion Bank and Canadian Imperial Bank of Commerce joined rivals in announcing higher dividends and share repurchases.

TD rose 4.9%, while CIBC ended down 2.8% after missing profit estimates as costs climbed.

All 11 major sectors ended higher.

The energy sector advanced 1.8% as oil prices rebounded after OPEC+ stuck to its policy of incrementally boosting output. U.S. crude oil futures settled 1.4% higher at $66.50 a barrel.

Consumer cyclical stocks gained 2.4%, helped by gains for Restaurant Brands International Inc and Magna International Inc.

As world governments scramble to determine how to respond to the emergent COVID-19 Omicron variant, the United States is set to require private health insurance companies to provide at-home tests, a policy expected to go into effect on Jan. 15.

The Omicron variant has spooked markets for about a week, hitting travel-related stocks particularly hard as a patchwork of new restrictions were enacted around the globe, but those companies bounced back in Thursday’s session.

The S&P 1500 Airlines and Hotel and Restaurants indexes jumped 7.5% and 3.8%, respectively.

It was the S&P 1500 Airlines index’s best one-day performance since Nov. 9, 2020, when Pfizer Inc announced the vaccine it developed with BioNTech was more than 90% effective in preventing COVID-19 infection.

Jobless claims and planned layoffs data provided further evidence that employers are increasingly disinclined to hand out pink slips amid a tight labor market, the result of booming demand colliding with worker scarcity and low labor market participation.

Labour scarcity, combined with stubbornly persistent supply chain constraints, has helped erase the word “transitory” from the Federal Reserve’s inflation vocabulary as wages and prices continue to rise, and could very well translate into rate hikes coming sooner and faster than many had hoped.

Market participants now train their gaze on the Labor Department’s hotly anticipated November employment report, expected on Friday.

“We’re optimistic we’ll have another strong number, suggesting the economy continues to be on very firm footing,” Detrick added. “We’re watching wage growth for any hints of potential inflationary worries.”

The Dow Jones Industrial Average rose 617.75 points, or 1.82%, to 34,639.79, the S&P 500 gained 64.06 points, or 1.42%, to 4,577.1 and the Nasdaq Composite added 127.27 points, or 0.83%, to 15,381.32.

All 11 major sectors of the S&P 500 closed in positive territory, with industrials, energy and financials enjoying the biggest percentage gains.

Boeing shares had their best day since Feb. 24, jumping 7.5% after China’s aviation authority gave its seal of approval the planemaker’s 737 MAX aircraft.

Grocery retailer Kroger Co raised its full-year sales and profit forecasts, sending its stock bounding 11% higher.

Consumer credit companies Visa Inc, Mastercard Inc and American Express Co all advanced more than 4%.

Advancing issues outnumbered declining ones on the NYSE by a 2.49-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored advancers.

The S&P 500 posted four new 52-week highs and 12 new lows; the Nasdaq Composite recorded 15 new highs and 559 new lows.

Volume on U.S. exchanges was 12.85 billion shares, compared with the 11.40 billion average over the last 20 trading days.

Read more:

Stocks that saw action on Thursday - and why

Investors track COVID case counts, watch key market levels as Omicron fears grow

Reuters, Globe staff

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