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Canada’s main stock index ended higher on Thursday as higher metal prices boosted the materials sector, but the market’s gains were held in check as investors worried that interest rate cuts in the U.S. could be delayed.

The S&P/TSX composite index ended up 52.39 points, or 0.2%, at 21,708.44, while the S&P 500 closed lower for a fifth straight session.

The decline for the U.S. benchmark stock index came as economic data and comments from Federal Reserve officials suggested the central bank was unlikely to cut interest rates in the near future.

“It is continuing to look like a higher rates for longer situation and it might not be until next year that we start to see U.S. rates come down,” said Graham Priest, investment advisor at BlueShore Financial.

The TSX snapped its own recent losing streak on Wednesday but gains were capped by the Canadian government’s planned tax increase on investment profits.

Canada’s plan to raise taxes on the savings of wealthy people and corporations is likely to hold back investment, potentially adding to the productivity malaise that has held back economic growth in recent years, say economists.

The materials sector on Thursday climbed 1.2% as gold and copper prices rose, with shares of First Quantum Minerals Ltd ending 8.9% higher.

The utilities group was another bright spot, adding 1.1%, and heavily-weighted financials were up 0.3%.

Energy was a drag, falling 0.5%, as the price of oil held near its lowest level in three weeks. U.S. crude oil futures settled 4 cents higher at US$82.73 a barrel.

U.S. economic data showed that the labour market remained resilient, as weekly initial unemployment claims were unchanged from the prior week at 212,000 while a gauge of manufacturing in the mid-Atlantic region rose to a two-year high.

The solid labour market, recent reading showing sticky inflation, and comments from Fed officials, including Chair Jerome Powell, have led markets to back off expectations the central bank would cut interest rates by at least 25 basis points at its June meeting.

Comments on Thursday from Fed officials reiterated the lack of urgency to lower rates, as New York Federal Reserve President John Williams cited the robust economy while Atlanta Federal Reserve President Raphael Bostic said he is “comfortable being patient” as inflation is returning to the Fed’s 2% target more slowly than expected.

Market expectations for a rate cut of at least 25 bps in June have shrunk to 15.2%, according to CME’s FedWatch Tool, with July standing at 41.5%. down from 48.4% a week ago.

The S&P 500 lost 0.22%. The Dow gained 0.06% while the Nasdaq fell 0.22%.

After the closing bell, Netflix fell about 4% in extended trade after posting its quarterly results.

On the plus side, stock Meta Platforms rose 1.54% as the biggest boost to the S&P 500 after Bernstein raised its price target to US$590 from US$535.

Earnings season continued to pick up steam with Genuine Parts surging 11.22% as the top percentage gainer on the S&P, after the automotive parts distributor raised its 2024 profit forecast.

In contrast, Las Vegas Sands dropped 8.66% as the worst S&P performer despite beating quarterly expectations, as multiple brokerages cut their price target on the stock, citing weakness in its Macau operations.

Equifax also tumbled, down 8.49% after the credit ratings firm forecast its second-quarter revenue below estimates.

On the NYSE declining issues outnumbered advancing ones by a 1.2-to-1 ratio and by a 1.18-to-1 ratio on the Nasdaq. The NYSE saw 34 new highs and 95 new lows while the Nasdaq had 24 new highs and 238 new lows. Volume on U.S. exchanges was 10.54 billion shares, compared with the 10.99 billion average for the full session over the last 20 trading days.

Reuters, Globe staff

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