Canada's main stock index edged higher Monday, while U.S. markets continued to rise after the S&P 500 ended last week at a record high. 

The S&P/TSX Composite Index closed up 17.78 points, 0.09 per cent, at 20,924.30.

In New York, the Dow Jones Industrial Average was up 138.01 points at 38,001.81. The S&P 500 Index was up 10.62 points at 4,850.43, while the Nasdaq Composite was up 49.32 points at 15,360.29.

The follow-through after last week’s record was a healthy sign for equities, said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.

After a period of consolidation to begin the year, this is a “bullish signal” for markets, he said. 

The strength is on the back of risk-on sectors like technology, real estate and industrials, said Archibald. 

With less exposure to certain sectors like tech in Canada, the TSX lagged behind its U.S. peers on Monday. 

“Canada’s been a little bit more challenged ... for a fairly long period of time,” said Archibald. 

That’s true in particular for energy, he said. Despite strength in oil prices, the energy index on the TSX hardly budged higher. 

Stocks in that sector have become oversold over the last several months, said Archibald. 

North of the border, investors are awaiting the Bank of Canada’s first interest rate decision of the year on Wednesday. The central bank is expected to hold its benchmark rate steady, said Archibald, and he doesn’t foresee its data-dependent messaging changing much either.

The central bank will also publish its quarterly monetary policy report, including new forecasts for the economy and inflation. 

This is a big week for economic data in the U.S., said Archibald, including GDP and a measure of inflation preferred by the U.S. Federal Reserve.

“All of those will give us more indication as to what the market wants to price for the move in interest rates in the U.S., and I think that will probably be the real driver of either risk on or risk off,” he said. 

It’s also a big week for earnings, Archibald said, as the U.S. will get companies like Netflix, Tesla and Visa reporting results for the fourth quarter, while both the U.S. and Canada will see some major rail companies start reporting. 

“Those will all give us an understanding (of) where the consumer is and what the economy looks like,” he said. 

The Canadian dollar traded for 74.33 cents U.S. compared with 74.28 cents U.S. on Friday.

The March crude oil contract was up US$1.51 at US$74.76 per barrel and the March natural gas contract was down 13 cents at US$2.13 per mm/BTU.

The February gold contract was down US$7.10 at US$2,022.20 an ounce and the March copper contract was down two cents at US$3.76 a pound.

This report by The Canadian Press was first published Jan. 22, 2024.