Financial numbers flow on the digital ticker tape at the TMX Group in Toronto's financial district on May 9, 2014. THE CANADIAN PRESS/Darren Calabrese

TORONTO - North American stock markets surged higher for a second day as some of recent volatility eased and investors returned to their favourite companies.

The S&P/TSX composite index closed up 182.04 points to 17,874.49, a day after gaining 355 points in its best performance since April.

The Toronto market has climbed 3.1 per cent in just two days for a start to February that was even stronger than a month earlier.

The question will be if it ends the same way January did, with all the gains wiped out in a selloff towards month's end after a strong 10-month run for equity markets, said Greg Taylor, chief investment officer of Purpose Investments.

"I think there was some nervousness the way January ended with all the games we saw on some of the retail and some of these smaller cap funds and different hedge funds blowing up," he said in an interview, referring to GameStop, BlackBerry Ltd. and other beneficiaries of a concerted action by some retail investors.

"But it feels like things have gotten a lot calmer now and this is more a return to normal."

Taylor pointed to the knock-on effect from hedge funds being forced to sell their favourite companies to fund margin calls or cover shorts.

Companies like Shopify Inc., whose shares surged 7.4 per cent Tuesday, bounced back after getting hurt last week from some profit-taking.

"There's really no news, but I think it's more just that people are feeling more calmer with how markets are acting and thinking they can add back some more favoured names."

Taylor anticipates there will be continued volatility in the coming months amid COVID-19 vaccine headlines as people question when life will return to normal.

"So I don't think we're completely out of the woods...(but) it feels like the craziness is over more than anything else."

In New York, the Dow Jones industrial average was up 475.57 points at 30,687.48. The S&P 500 index was up 52.45 points at 3,826.31, while the Nasdaq composite was up 209.38 points at 13,612.78.

Ten of the 11 major sectors on the TSX climbed in a broad-based rally that excluded materials.

That sector lost 2.9 per cent as a 7.7 per cent drop in silver prices a day after reaching an eight-year high hurt miners.

First Majestic Silver Corp. shares plunged 24.7 per cent, Silvercorp Metals Inc. was down 17.3 per cent and Fortuna Silver Mines Inc. lost 16.1 per cent.

The April gold contract was down US$30.50 at US$1,833.40 an ounce and the March copper contract was down 2.15 cents at US$3.52 a pound.

Health care led the TSX, gaining 5.6 per cent as investors latched onto comments from three top U.S. senators that they hope to legalize cannabis this year.

Shares of Aphria Inc., Aurora Cannabis Inc. and Cronos Group Inc. surged 17.6, 13.1 and 10.7 per cent, respectively.

Industrials gained 2.6 per cent as shares of Air Canada increased 4.2 per cent and the railways were higher.

"It still feels to me like it's the sector that's going to be under pressure until we can get some more clarity around the reopening, but it's right now more bouncing off of the selloff from last week than anything else," said Taylor.

Technology rose 1.4 per cent despite BlackBerry falling 21.4 per cent.

Higher bond yields helped the financials sectors.

Energy moved only slightly higher even though March crude oil futures hit a high of US$55.26 a barrel before settling up US$1.21 to US$54.76 per barrel. The March natural gas contract was down half a cent at US$2.84 per mmBTU.

Taylor said supply is not going to come on as fast as everyone thought after some companies stopped producing last year as prices plunged.

The Canadian dollar traded for 78.02 cents US compared with 77.98 cents US on Monday.

This report by The Canadian Press was first published Feb. 2, 2021.

Companies in this story: (TSX:BB, TSX:SHOP, TSX:FR, TSX:SVM, TSX:FVI, TSX:AC, TSX:APHA, TSX:ACB, TSX:CRON, TSX:GSPTSE, TSX:CADUSD=X)

News from © The Canadian Press, 2021