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U.S. stock markets hold on to gains, base metals boost TSX

European stock markets

U.S. markets recently hit record heights even as expectations for an interest rate reduction were pushed back from March amid ongoing economic strength

Strength in base metal stocks helped lead modest but broad-based gains on Canada’s main stock index (TSX), while U.S. markets gained.

The S&P/TSX composite index edged up 85.85 points at 20,957.74.

In New York, the Dow Jones industrial average (DJIA) was 141.24 points higher at 38,521.36. The S&P 500 index was 11.42 points higher at 4,954.23, while the Nasdaq composite was up 11.32 points at 15,609.00.

A day without major earnings or economic data gave investors some time to digest the moves of the last week, said Stephen Duench, VP and portfolio manager for AGF Investments Inc.

U.S. markets recently hit record heights even as expectations for an interest rate reduction were pushed back from March amid ongoing economic strength.

So on a quieter day, it is a “huge positive” that markets are more or less holding on to those gains, said Duench, noting that February has historically been volatile and negative.

The bond market calmed down somewhat on Tuesday after Treasury yields had been on the rise in recent days.

U.S. earnings expectations have been overall met or exceeded so far, Duench added. But those firms that missed were punished more than usual.

There is definitely a bit of scepticism in the market. Or, at least a little bit of negativity in the market if you did miss your earnings, he said.

Expectations for Canadian companies’ earnings are lower than they were for U.S. firms, said Duench, meaning there is opportunity for some positive surprises as reports start rolling in over the coming week.

Next week will see a big batch of economic figures in the U.S. that, if they come in softer, could solidify new expectations that interest rate reductions will begin in May, he said, noting that March is off the table.

Softer economic data, as we progress through the month, will actually raise the May odds, he added.

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