Canada's main stock index gained more than 150 points Thursday and U.S. markets also edged higher in advance of a highly anticipated meeting of the U.S. Federal Reserve in Jackson Hole, Wyo.

The S&P/TSX composite index closed up 150.96 points at 20,172.34, driven largely by gains in the heavyweight financial sector, which rallied Thursday after two days of losses caused by weaker-than-expected quarterly earnings from some of the country's biggest banks.

RBC's stock price, which fell 2.60 per cent Wednesday after it reported its third-quarter profit declined from a year ago, rebounded Thursday by 2.08 per cent to close at $125.76 per share.

TD Bank, which reported its earnings Thursday morning, saw its share price rise 0.74 per cent by end of day to $86.06 per share. While TD's third-quarter income also declined from a year ago and the bank is also preparing for a worsening global economy, its chief financial officer Kelvin Tran said in an interview the bank will overall benefit from higher interest rates.

As a whole, the S&P/TSX capped financials index rose 0.86 per cent on the day. Other sectors that saw gains Thursday were tech and health care, which benefited from the strong performance of cannabis stocks such as Tilray Inc., Cannabis Growth Corp. and Aurora Cannabis Inc.

In New York, the Dow Jones industrial average closed up 322.55 points at 33,291.78. The S&P 500 index was up 58.35 points at 4,199.12, while the Nasdaq composite closed up 207.74 points at 12,639.27.

Trading volumes have been relatively light in recent days, as investors seem hesitant to make any big moves in advance of Friday's highly anticipated meeting of the U.S. Federal Reserve in Jackson Hole. 

Many hope Fed Chair Jerome Powell will use his scheduled speech Friday to signal that the central bank is close to the end of its rate-hiking cycle, and that it believes it can get inflation back under control without aggressive measures that could harm the economy. 

Kevin Headland, co-chief investment strategist at Manulife Investment Management, said there's no denying that all eyes will be on Powell Friday. But he added he expects the narrative coming out of Jackson Hole to be the same one we've heard for weeks — inflation is peaking, but we're not out of the woods and additional measured interest rate increases will be required.

Most traders already believe the U.S. Central Bank will announce either a 50 or a 75-basis point interest rate hike in September (a basis point is a hundredth of a percentage point), Headland said, while the Bank of Canada is expected to announce another 75-basis point hike next month. 

He said that means Powell's speech could actually be good for financial markets, if it confirms what investors are already expecting.

"The market likes clarity," Headland said. "They (the Federal Reserve) are going to continue to raise rates, but I don’t think they’re going to raise rates faster than what has already been baked in. And I think that’s where the positive narrative comes from.”

The Canadian dollar traded for 77.30 cents US compared with 77.02 cents US on Wednesday.

The October crude contract was down $2.37 at US$92.52 per barrel and the October natural gas contract was up four cents at US$9.34 per mmBTU.

The December gold contract was up US$9.90 at US$1,771.40 an ounce and the September copper contract was up six cents at US$3.70 a pound.