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Canada’s main stock index fell on Wednesday as investors took stock of strong gains since the start of the week amid optimism that a seasonal boost for the market could offset uncertainty caused by the Omicron coronavirus variant and rising inflation pressures. But Wall Street closed slightly higher, with the three major indexes managing their third straight day of gains after test data showed the COVID-19 vaccine from Pfizer and BioNTech offered some protection against the new Omicron variant.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 85.30 points, or 0.4%, at 21,077.35, after climbing 2.6% in the first two days of the week.

The rally “was pretty powerful in the two days prior, so I expected a pullback today,” said Steve Palmer, chief investment officer at AlphaNorth Asset Management. “It’s been my belief that it would be unusual to have a major correction in December. ... I expect a strong rally into year-end.”

December has historically been a strong month for the stock market.

The Bank of Canada said Wednesdays that the variant has created “renewed uncertainty” even as it warned that inflation was broadening. It left interest rates unchanged and reiterated that it expects to start raising them in the middle quarters of next year.

“The surprise would have been if they (the BoC) went more hawkish, but they didn’t,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “They’re generally bullish on the economy and they’re still trying to talk down inflation.”

Leading losses for the Toronto market was the technology sector, down 2.2%, with Nuvei Corp falling 40.4% following a new short call from Spruce Point Capital Management.

The industrials group ended 1% lower, while energy lost 0.5% despite higher oil prices. U.S. crude oil futures settled 0.4% higher at $72.36 a barrel.

The materials group, which includes precious and base metals miners and fertilizer companies, was one of the few sectors to gain. It added 0.3%, while healthcare was up 1.4%.

Pfizer and BioNTech said their three-shot course of the vaccine was able to neutralize the Omicron variant in a laboratory test and they could deliver an upgraded vaccine in March 2022 if needed.

Investors on Wall Street reacted by piling into travel related stocks. The S&P 1500 Airlines index closed up 1.96%. Its session high was the highest since Nov. 24, which was just before news of the variant emerged.

Markets have been volatile since the variant was discovered, with investors worried Omicron could force new restrictions in countries and hurt the global recovery.

In a bid to slow its spread, Britain said Wednesday it could implement tougher measures, including advice to work from home, as early as Thursday.

While Pfizer said Omicron protection was reduced among people who took just two doses of the vaccine, investors were still somewhat reassured.

With Nasdaq outperforming the Dow, Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago described the session as a “perfect risk-on kind of day.”

“A lot is revolving around virus news. It’s a reopening trade more than anything else,” said Nolte.

The Dow Jones Industrial Average rose 35.32 points, or 0.1%, to 35,754.75, the S&P 500 gained 14.46 points, or 0.31%, to 4,701.21 and the Nasdaq Composite added 100.07 points, or 0.64%, to 15,786.99.

The S&P finished less than a point below where it closed before a steep sell-off. The index fell as much as 4.4% between Nov. 24, the day before Thanksgiving, and Friday, as investors fled risky bets due to Omicron fears and concerns about rising interest rates after a Federal Reserve update last week.

“Equity investors are buying into the thesis that rates won’t have to go up very much to tame inflation. It makes them more comfortable buying stocks although more inclined to buy quality growth stocks than cyclicals,” said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.

Sector gains were led by communication services, which rose 0.75% followed closely by healthcare, up 0.74%. With only three of the 11 major S&P sectors losing ground on the day, the laggards were financials, down 0.46%, consumer staples, down 0.37% and utilities, which edged down 0.1%.

WHO director-general Tedros Adhanom Ghebreyesus said governments should urgently reassess their national responses to COVID-19 and accelerate their vaccination programs.

So-called reopening stocks, most affected by the pandemic’s lockdowns, were among the S&P’s top gainers on Wednesday. These included Norwegian Cruise Line, up 8%, Carnival Corp , up 5.5% and Royal Caribbean, up 5.2%.

Goodyear Tire & Rubber Co rose 2.6% after Deutsche Bank upgraded the stock to “buy” from “hold.”

Stanley Black & Decker advanced 3.3% after Sweden’s Securitas agreed to buy its electronic security solutions business for $3.2 billion.

Advancing issues outnumbered declining ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.93-to-1 ratio favored advancers.

The S&P 500 posted 31 new 52-week highs and no new lows; the Nasdaq Composite recorded 36 new highs and 39 new lows.

On U.S. exchanges 10.3 billion shares changed hands compared with the 11.52 billion average for the last 20 sessions.

Read more: Stocks that saw action on Wednesday - and why

Reuters, Globe staff

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