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North American stocks rebounded on Thursday as investors looked to a spate of high-profile earnings and Friday’s U.S. employment report a day after the Federal Reserve quashed lingering bets that interest rate cuts could begin as early as March.

While a broad rally sent all three major U.S. stock indexes sharply higher, the tech-laden Nasdaq advanced the most. TSX gains were less impressive, mostly owing to a pullback in the energy sector.

“There’s further digestion of the Fed,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. “It’s still a growth market and [Wednesday’s] sell-off was an overreaction. So today we’re getting a rally.”

Shares of Meta Platforms spiked 14% in extended trading after reporting better-than-expected revenue and declaring its first-ever dividend.

Amazon.com also gained in post market trading following its earnings release.

Apple Inc dipped in extended trading after profit, revenue beat analyst estimates but China sales missed targets.

On Wednesday, the Federal Open Markets Committee (FOMC) left its policy rate unchanged as expected. At his press conference, Fed Chair Jerome Powell called a March rate cut “unlikely,” resetting market expectations of a dovish Fed pivot in the first quarter, and prompting a steep sell-off.

The KBW Regional Banking index fell 2.3%, weighed down by the 11.1% drop in New York Community Bancorp’s shares after the company reported pain in its commercial real estate portfolio, sparking renewed fears over the health of U.S. regional lenders.

The broader S&P Banking index fared better, ending the day off 1.4%.

Fourth quarter reporting season is going full-bore, with 208 of the companies in the S&P 500 having reported. Of those, 80% have delivered consensus-beating earnings, according to LSEG.

Analysts now expect aggregate S&P 500 earnings growth of 6.4% year-on-year for the October-December period, an improvement over the 4.7% growth seen on Jan. 1, per LSEG.

A raft of economic data showed rising productivity helping to cap U.S. labour costs, while an increase in announced layoffs and weekly U.S. jobless claims provided further evidence of softening in the labour market, which is viewed by the Fed as a precondition to assuring a sustainable downward path for inflation. U.S. manufacturing stabilized in January amid a rebound in new orders, while Canadian manufacturing data also offered encouragement. It showed a slowdown in the pace of contraction in the sector as inflation pressures eased and firms grew more confident about the outlook.

“We see these [U.S.] data, on the eve of the labour report, as consistent with a healthy but moderating labor market,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Billings, Montana. “(These reports) are consistent with our view of the economic path for 2024; that it will continue to grow, but at a slower pace.”

The S&P 500 climbed 1.25% to end the session at 4,906.19 points. The Nasdaq gained 1.30% to 15,361.64 points, while Dow Jones Industrial Average rose 0.97% to 38,519.84 points.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 97.33 points, or 0.5%, at 21,119.21. On Wednesday, the index posted its biggest decline in two weeks as the Fed dashed hopes of a rate cut as soon as March.

Sectors such as industrials and consumer discretionary, which includes large automotive suppliers, could benefit from a manufacturing turnaround. They rose 1.9% and 1.5%, respectively, on the TSX.

The materials sector, which includes precious and base metals miners and fertilizer companies, rallied 2.3% as gold prices rose, but energy was a drag.

It fell 1.3% as the price of oil settled 2.7% lower at US$73.82 a barrel after false market speculation that Israel had agreed to a Gaza ceasefire proposal.

In individual stock moves, Canada Goose Holdings Inc shares climbed 7.9% after the luxury parka maker forecast fourth-quarter revenue above analysts’ estimates.

Allied Properties REIT fell 8.9% after it disclosed a C$499 million writedown as offices remained sparsely staffed in big Canadian cities.

Of the 11 S&P 500 sector indexes, 10 rose, led by consumer discretionary, up 1.98%, followed by a 1.97% gain in consumer staples.

Merck advanced 4.6% after the drug maker’s upbeat fourth-quarter results.

Qualcomm fell 5.0% on concerns over Android sales in China.

Honeywell was off 2.4% after the diversified industrial conglomerate provided disappointing first-quarter guidance.

Across the U.S. stock market, advancing stocks outnumbered falling ones by a 3.0-to-one ratio. Volume on U.S. exchanges was relatively heavy, with 12.0 billion shares traded, compared to an average of 11.6 billion shares over the previous 20 sessions.

Reuters, Globe staff

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