Canada’s main stock index rebounded from Tuesday’s broad selloff, but investors remain on edge, says a market observer.

“I would say yesterday’s selloff is probably a more accurate representation of where people’s heads are at out there,” says Ryan Crowther, vice-president and portfolio manager at Franklin Bissett Investment Management.

The S&P/TSX composite index surged to close up 218.02 points to 15,095.02, a day after losing 194 points.

The key energy, materials and industrials sectors that account for about 40% of the index led the recovery on higher crude oil and gold prices.

The January crude contract rose US$1.20 to US$54.63 a barrel and the December natural gas contract was down US7.2¢ to US$4.45 per mmBTU.

The December gold contract jumped US$6.80 at US$1,228.00 an ounce and the December copper contract gained US2.8¢ at US$2.79 a pound.

Crowther says market sentiment has changed from a year ago when U.S. tax cuts drove economic growth and heightened corporate profits. The focus now is on headwinds such as earnings growth, higher interest rates, trade and inflation.

“There’s lots of things to be considering on the risk side of the equation that are more clearly in focus right now than they would have been a year ago,” he said in an interview.

Business conditions remain good but the market is discounting valuations, which present buying opportunities for investors.

Slowing global growth at the later stages of the economic cycle doesn’t necessarily mean a recession is near, Crowther said, even though discussion of such an event as early as 2020 is ramping up.

The Canadian dollar traded at an average of US75.36¢ compared with an average of US75.42¢ on Tuesday.

The optimism was initially seen on Wall Street until the end of the day as the Dow Jones industrial average lost 0.95 points at 24,464.69 heading into the Thanksgiving holiday. The S&P 500 index rose by 8.04 points to 2,649.93, while the Nasdaq composite gained 63.43 points at 6,972.25.

Investor anxiety is translating into increased volatility, said Crowther.

“I think investors are much more on edge currently and I think that’s what’s manifesting into these a little bit more magnitude in terms of the day-to-day volatility.”