Canada's main stock index posted a small gain Thursday despite weakness in energy stocks, while U.S. markets ended the day mixed.

After a weak start to the year with some of 2023’s winners leading the way down, Thursday saw markets start to stabilize, said Greg Taylor, chief investment officer at Purpose Investments. 

“This feels more like a throwaway day, trying to stabilize from the initial weakness we had to start the week,” he said. 

This wasn’t a surprise after the nine-week winning streak on Wall St. that ended the year, said Taylor.

“We ended the year with a really strong stretch,” he said, as markets started to get more comfortable with the idea that a soft landing for the economy was within reach.

“I think we ended on a high note, and that’s usually a dangerous set up for the first part of January.”  

The S&P/TSX Composite Index closed up 52.77 points, or 0.25 per cent, at 20,871.35.

In New York, the Dow Jones Industrial Average was up 10.15 points at 37,440.34. The S&P 500 Index was down 16.13 points at 4,688.68, while the Nasdaq Composite was down 81.91 points at 14,510.30.

This week, bond yields have started to rise, said Taylor, pushing back somewhat on the narrative around interest rate cuts. Market calls for the U.S. Federal Reserve to lower its key rate in March have begun to ease since last year, he noted — “which is probably healthy.”

“We got probably a little ahead of ourselves pricing rate cuts,” he said. 

The Fed has indicated it expects to start cutting rates at some point this year as inflation continues to moderate. 

Friday will see fresh payroll data on both sides of the border, and then U.S. earnings season begins next week, said Taylor. 

Heading into 2024, the Canadian economy continues to be weaker than the U.S. economy, which will be “something to watch,” noted Taylor. 

He thinks as the year progresses, investors may finally be able to focus less on monetary policy and the macro environment, and more on companies and earnings.

“I think the goal for everyone this year is to get away from focusing on central banks,” said Taylor. 

The Canadian dollar traded for 74.88 cents U.S. compared with 74.87 cents U.S. on Wednesday.

The February crude contract was down 51 cents at US$72.19 per barrel and the February natural gas contract was up 15 cents at US$2.82 per mm/BTU.

The February gold contract was up US$7.20 at US$2,050.00 an ounce and the March copper contract was down two cents at US$3.84 a pound.

With files from The Associated Press

This report by The Canadian Press was first published Jan. 4, 2024.