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Stocks ended sharply higher on Monday, with the Dow completing its strongest session in over three months as investors piled back into energy and other sectors expected to outperform as the economy rebounds from the pandemic. The TSX rallied about 0.8% thanks to a surge in oil and gas stocks, but remains modestly below its record high from earlier this month.

The small-cap Russell 2000 and the Dow Jones Transports Average, considered a barometer of economic health, both jumped about 2%.

The S&P 500 value index, which includes banks, energy and other economically sensitive sectors and has led gains in U.S. equities so far this year, surged 1.9%, outperforming a 0.9% rise in the growth index.

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That was a stark reversal from last week, when the Fed’s hawkish signals on monetary policy sparked a round of profit taking that wiped out value stocks’ lead over growth this month and triggered the worst weekly performance for the Dow and the S&P 500 in months.

“The overall theme here is the market still does not know whether it wants easy money or tight money and it’s in a tug of war,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.

The S&P/TSX Composite Index rose 156.77 points, or 0.78%, at 20,156.36. Energy stocks led the charge, jumping 4.66%, but gains were broad across sectors. Consumer staples, however, lost 0.57%.

Two notable decliners were Lundin Mining, falling 9.36% after announcing a copper production shortfall at its Candelaria copper-gold mine in Chile, and Transat AT. The Montreal-based tour and airline operator said on Monday that takeover talks have ended between the company and an investor group led by Pierre Karl Péladeau. Transat said it rejected Mr. Péladeau’s offer of $5 a share as too low and unlikely to win shareholder approval.

On Wall Street, all 11 S&P 500 sector indexes rose, with energy jumping 4.3% and leading the way, followed by financials, up 2.4%.

Microsoft Corp rose 1.2% to close at an all-time high.

The S&P 500 has traded in a tight range this month as investors juggled fears of an overheating economy with optimism about a strong economic rebound.

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Focus this week will be on U.S. factory activity surveys and home sales data, while Fed Chair Jerome Powell testifies before Congress on Tuesday.

Unofficially, the Dow Jones Industrial Average rose 1.76% to end at 33,876.65 points, while the S&P 500 gained 1.40% to 4,224.71.

The Nasdaq Composite climbed 0.79% to 14,141.48.

Cryptocurrency stocks, including miners Riot Blockchain, Marathon Patent Group and crypto exchange Coinbase Global, tumbled between 1% and 4% on China’s expanding crackdown on bitcoin mining. 

Moderna Inc rallied 4.5% after a report said the drugmaker is adding two new production lines at a COVID-19 vaccine manufacturing plant, in a bid to prepare for making more booster shots. read more

Market participants are girding for a major trading event on Friday, when the FTSE Russell completes the annual rebalancing of its indexes, potentially affecting trillions of dollars in investments.

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Oil prices soared on Monday, gaining on a pause in talks to end U.S. sanctions on Iranian crude, and as the dollar retreated from two-month highs.

Brent crude for August gained $1.39, or 1.9% to settle at $74.90 a barrel. U.S. West Texas Intermediate (WTI) crude for July gained $2.02, or 2.8%, to end at $73.66.

Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel. The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.

Bank of America said that Brent crude was likely to average $68 a barrel this year but could hit $100 next year on unleashed pent-up demand and more private car usage.

Oil was boosted by a weaker U.S. dollar, which can send speculative investors into greenback-denominated assets like commodities.

Negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.

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“The election of a hardliner in Iran is weighing on market (supply) as sanctions look less likely to be lifted,” said Bob Yawger, director of Energy Futures at Mizuho in New York.

A deal could lead to Iran exporting an extra 1 million barrels per day, or 1% of global supply, for more than six months from its storage facilities.

Iranian and Western officials say Raisi’s rise is unlikely to alter Iran’s negotiating position. Two diplomats said they expected a break of about 10 days.

Iranian President-elect Ebrahim Raisi on Monday backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting U.S. President Joe Biden, even if Washington removed all sanctions.

Additionally, oil prices have drawn support from forecasts of limited growth in U.S. oil output, giving the Organization of the Petroleum Exporting Countries more power to manage the market in the short term before a potentially strong rise in shale oil output in 2022.

In other commodities, gold on Monday clawed back some losses from its biggest weekly percentage drop since March 2020, as a pause in the U.S. dollar’s rally helped restore the metal’s allure.

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U.S. gold futures settled up 0.8% at $1,782.90.

“People are using the correction to buy gold, at these price levels, there is value to hold positions in gold, especially for the long run,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago

Gold prices fell 6%, or $113 an ounce, last week as the U.S. Federal Reserve signaled it would soon start tapering its asset purchases and could start raising interest rates in 2023.

But the dollar index has retreated from 2-1/2-month highs, prompting investors to turn to gold, which fell for six straight sessions before Monday’s bounce.

U.S. 10-year Treasury yields also rose from a four-month low, raising non-yielding bullion’s opportunity cost.

Reuters, Globe staff

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