Photo: The Canadian Press

North American markets moved higher Monday as investor sentiment rallied in the aftermath of what was the worst week for stocks so far this year.

The S&P/TSX composite index was up 40.94 points at 20,260.13.

In New York, the Dow Jones industrial average was up 72.17 points at 32,889.09. The S&P 500 index was up 12.20 points at 3,982.24, while the Nasdaq composite was up 72.04 points at 11,466.98.

Buoyed by strength in the industrial and base metals sectors, markets on Monday recovered some of their losses from last week, which was the worst week for stocks since the year began.

But Allan Small, senior investment advisor at IA Private Wealth, said Monday’s “muted” rally was more about the absence of news than any particularly positive economic event or corporate earnings report.

It’s a continuation of a pattern that has been repeated all year, Small added.

“On days when you have Federal Reserve commentary … you tend to get the market sell-off,” he said.

“On days when there really is nothing to report—economic data isn’t coming at you hot or there’s no Fed speak—the market seems to gain some traction and move higher.”

Investors have been worrying for months about the possibility of recession in the wake of a series of rapid interest rate hikes by central banks last year. Each time the U.S. Federal Reserve raises rates, or Fed Chair Jerome Powell hints that inflation remains too hot, stocks fall.

Despite predictions by economists that an economic downturn is likely this year, reports on everything from the job market to consumer spending to inflation itself have been coming in firmer than expected over the last few weeks.

Small said that’s why markets fell less week. Investors are afraid that if these economic indicators remain hot, the U.S. central bank will keep raising interest rates and tip the balance into a potentially sharp recession.

“That was the direction last week, the worst week of the year,” Small said.

“This week we’ve obviously turned a page, but we’ll have to see. The macro is ruling the day, every day, for now.”

The Canadian dollar traded for 73.68 cents US compared with 73.41 cents US on Friday.