By Anna Hirtenstein
U.S. stocks notched gains Tuesday, extending a recent rally that has sent major benchmarks to fresh records.
The S&P 500 added 0.4% shortly after the opening bell. The Dow Jones Industrial Average advanced about 129 points, or 0.4%. The Nasdaq Composite gained about 0.4%. All three indexes closed at all-time highs Monday.
Stocks have been powering higher in the final days of the year, and the latest leg of the rally has been driven in part by U.S. lawmakers' efforts to pass a second stimulus package to help the economy.
"Some people are getting carried away by the race for records. The market momentum is pushing and exceeding these record highs," said Carsten Brzeski, global head of macro research at ING Groep. "They are fictive thresholds, but benchmarks can live their own lives and this is happening now."
Trading volumes are also typically thinner in the final days of the year with many people on vacation, which can potentially amplify market moves.
The House on Monday approved a bill proposing to increase the size of stimulus checks to $2,000 from $600. The measure now heads to the Senate where its fate is uncertain.
"Markets aren't necessarily taking the potential increase for granted, but there is a cheerfulness about the possibility of stepping it up. This is partly being priced in," said Mr. Brzeski.
In bond markets, the yield on the benchmark 10-year Treasury ticked up to 0.946%, from 0.932% Monday.
Overseas, the pan-continental Stoxx Europe 600 added 0.9%. In the U.K., where markets reopened Tuesday, the main FTSE 100 stocks benchmark rose about 2% as investors cheered the post-Brexit deal struck on Christmas Eve. British and European Union officials reached an agreement that includes a free-trade accord, bringing to an end over four years of uncertainty.
"The Brexit deal will help risk sentiment. As investors come back to the office for the first time since Christmas, people are looking into the details of the deal," said James Athey, investment manager at Aberdeen Standard Investments.
In Asia, most major benchmarks climbed. Japan's Nikkei 225 index rose 2.7%, ending the day at a 30-year high. Hong Kong's Hang Seng Index added 1%, while the Shanghai Composite Index edged down 0.5%.
"The momentum in Asian stocks shows that this whole vaccine-motivated rally is getting global," Mr. Blokland said. "For 2021, we are quite bullish, we do think that the economic recovery will recommence from [the first quarter] and the stimulus boost out of the U.S. will help."
Gunjan Banerji contributed to this article.
Write to Anna Hirtenstein at email@example.com
(END) Dow Jones Newswires
December 29, 2020 10:09 ET (15:09 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.