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Wall Street ended sharply higher at the close of a broad rally on Thursday, bouncing back from three straight days of selling on upbeat labour market data.

All three major U.S. stock indexes notched solid gains, with the Nasdaq, weighed by Tesla Inc, picking up the rear. Meanwhile, cyclical shares enjoyed the biggest gains.

Canada’s TSX closed only modestly higher amid weak performance in the energy and materials sectors. Oil prices fell about 3% as India’s coronavirus crisis deepened and a key U.S. fuel pipeline resumed operations, halting a rally that had lifted crude to an eight-week high after forecasts for a rebound in global demand later in the year.

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Recent economic data has prompted inflation fears as scarcity of both materials and workers threatens to send consumer prices surging in the face of a demand boom.

“If this is a footrace, supply chains are still tying their shoes,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “But they will catch up with demand fairly quickly.”

But on Thursday, investors appeared to be focusing on the glass-half-full side of the demand/supply equation.

This was evidenced by the outperformance of small caps, chips and transports, economically sensitive stocks that stand to gain as the United States emerges from the pandemic recession.

“Sectors and stocks that were hurt most significantly by yesterday’s sell-off rebounded strongly today given that economic growth is expected to remain strong throughout the year and any inflation is likely to be temporary,” Carter added.

New applications for unemployment insurance continue to fall, according to jobless claims data from the Labor Department that hit a 14-month low.

Labor Department data also showed producer prices surged last month, building on the inflation surge narrative of Wednesday’s consumer prices report.

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“The inflation boogeyman is back right on cue,” Carter said. “And will continue to spook markets for the coming months.”

But rising prices were widely anticipated, and the U.S. Federal Reserve has provided repeated assurances that it does not foresee those spikes morphing into sustained, long-term inflation.

The S&P/TSX Composite Index closed up 28.04 points, or 0.15%, at 19,135.81. Energy stocks lost 2.22% as crude oil prices fell, and materials declined 0.65%.

Canadian Tire was among the biggest gainers on the TSX, rising 10.60% after it blew past analysts’ estimates for first-quarter profit, as pandemic-weary people bought more bikes, patio furniture and pool supplies online to stay entertained during the COVID-19 pandemic.

Miner Turquoise Hill Resources Ltd. was the biggest loser, falling 18.47% after cutting its outlook for full-year gold and copper production.

The Dow Jones Industrial Average rose 433.79 points, or 1.29%, to 34,021.45, the S&P 500 gained 49.46 points, or 1.22%, to 4,112.5 and the Nasdaq Composite added 93.31 points, or 0.72%, to 13,124.99.

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Of the 11 major sectors in the S&P 500, 10 ended green, with industrials enjoying the largest percentage gain.

Energy, weighed by a drop in crude prices, was the sole loser, shedding 1.4%. Walt Disney Co shares were down nearly 5% in after-hours trading after posting quarterly results.

Dating app owner Bumble Inc tumbled 14.3%, falling below its initial public offering price, as investors remained cautious about how quickly users will return to in-person meetings.

Boeing Co rose 0.8% after gaining approval from U.S. regulators for a fix of an electrical grounding issue.

Tesla continued its slide, dropping 3.1%, the heaviest drag on the Nasdaq, after boss Elon Musk doubled down on his sudden rejection of cryptocurrency bitcoin.

Advancing issues outnumbered declining ones on the NYSE by a 1.91-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers. The S&P 500 posted 13 new 52-week highs and no new lows; the Nasdaq Composite recorded 49 new highs and 201 new lows. Volume on U.S. exchanges was 11.50 billion shares, compared with the 10.53 billion average over the last 20 trading days.

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Brent crude ended the session down $2.27, or 3.3%, at $67.05 a barrel, after rising 1% on Wednesday. West Texas Intermediate (WTI) settled $2.26, or 3.4%, lower at $63.82 a barrel, having risen 1.2% in the previous session.

Both benchmarks marked their biggest daily drops in percentage terms since early April.

“Crude prices have steadily declined as investors hit the pause button with super commodity cycle trade,” said Edward Moya, senior market analyst at OANDA.

“Inflationary fears have unnerved some investors into taking some profit off the table with their energy trades.”

U.S. President Joe Biden said motorists can expect filling stations to begin returning to normal this weekend even as shortages gripped some areas amid restart of the country’s top fuel pipeline network after it was shut by a ransomware attack.

The nearly-week long shutdown of the Colonial Pipeline, which carries 100 million gallons per day of fuel, caused gasoline shortages and emergency declarations from Virginia to Florida, led two refineries to curb production, and spurred airlines to reshuffle refueling operations.

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In another bearish signal for oil demand, a variant of the coronavirus has swept through India, the world’s third-biggest importer of crude.

Medical professionals have not been able to say when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.

“Concerns are growing that the untamed spread of the coronavirus in India and in Southeast Asia will dent oil demand,” PVM analysts said in a note.

“Its impact, however, is expected to be relatively brief and the second half of the year will see the healthy revival of oil demand growth.”

U.S. gold futures settled 0.1% higher at $1,824.

Reuters, Globe staff

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