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Canada’s main stock index rose on Wednesday, including gains for resource and financial shares, as commodity prices climbed and U.S. economic data supported bets the Federal Reserve would begin lowering interest rates over the coming months.

The S&P/TSX composite index ended up 37.36 points, or 0.2%, at 22,112.46, staying in touch with the record closing high it posted on Monday at 22,185.25. The S&P 500 also posted a modest gain.

“This is a classic TSX rally in that you’ve got the miners rallying, precious metals in particular, you’ve got energy rallying and you got the financials rallying,” said Philip Petursson, chief investment strategist at IG Wealth Management. “This isn’t a fluke. This is driven by fundamentals and these fundamentals can continue for a while yet.”

Combined, the energy, materials and financial sectors account for roughly 60% of the Toronto market’s weighting.

The materials sector, which includes metal miners and fertilizer companies, rose 1.9% as copper prices climbed and gold moved to a fresh record high.

“Gold is finally responding to not only inflation but the expectation for lower real interest rates,” Petursson said.

Bond yields eased after data showed U.S. services industry growth eased further in March, suggesting inflation is slowing. The data from the Institute for Supply Management showed that non-manufacturing PMI declined for the second straight month to 51.4 in March, down from 52.6 in February, and weaker than analysts had expected, according to a Reuters poll. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy, and the data still indicates the U.S. economy continues to expand, though at a moderate pace.

Meanwhile, fresh comments Wednesday by Federal Reserve Chair Jerome Powell focused on the need for more debate and data before interest rates are cut.

In separate comments to CNBC on Wednesday, Atlanta Fed President Raphael Bostic said rates should likely not be reduced until the fourth quarter of this year.

Traders were pricing in a 57% chance the Fed will cut interest rates by 25 basis points in June, according to CMEGroup’s FedWatch tool, down from about 64% a week ago.

The TSX energy sector added 1.5% as the price of oil settled at a five-month high, rising 0.3% to $85.43 a barrel, while financials ended up 0.2%.

Lightspeed Commerce shares gained 5.5% after the payments company announced 280 job cuts, looking to turn profitable.

Professional services firm WSP Global was a drag, falling 5.4%, after short-seller Spruce Point Capital Management shorted the stock.

The Dow Jones Industrial Average fell 43.1 points, or 0.11%, to 39,127.14, the S&P 500 gained 5.68 points, or 0.11%, to 5,211.49 and the Nasdaq Composite added 37.01 points, or 0.23%, to 16,277.46.

Most of the major S&P 500 sectors advanced, led by gains in energy, materials and communication service.

Among decliners in the U.S., Ulta Beauty dropped 15.3% after the beauty retailer gave downbeat forecast at an industry conference. Shares of e.l.f. Beauty and Coty also fell.

Also, Intel shares dropped 8.2% after the chipmaker disclosed $7 billion in operating losses for its foundry business in 2023, steeper than the $5.2 billion reported the year before.

Volume on U.S. exchanges was 11.03 billion shares, compared with the 11.76 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.25-to-1 ratio favored advancers. The S&P 500 posted 33 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 90 new highs and 124 new lows.

Reuters, Globe staff

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