By Anna Hirtenstein
U.S. stocks rose Tuesday, putting the S&P 500 on course for a fresh record, as the optimism behind the November market rally extended into a new month.
The broad U.S. index gained 1.2%, and the tech-heavy Nasdaq Composite added 1.1%, also on pace for a record. The Dow Jones Industrial Average advanced 1.2%, or about 361 points, after on Monday closing out its best month since 1987.
Despite the tumult of 2020, the S&P 500 is up 13% for the year, while the surge in technology shares has helped the Nasdaq soar 37%.
Investors' sentiment has been buoyed in recent weeks by the development of Covid-19 vaccines, which could curtail infection levels and let social and business activity return to pre-pandemic levels.
Pfizer partner BioNTech and U.S. drugmaker Moderna have applied for their coronavirus vaccines to be approved in the European Union, the EU's chief medicines regulator said Tuesday.
"The mood of the market is rather optimistic," said Eric Barthalon, global head of capital markets research at Allianz. "For the time being, markets have bought the news that vaccines are going to be rolled out earlier than expected."
Policy makers such as Federal Reserve Chairman Jerome Powell are paying more attention to potential hurdles in widespread distribution of the vaccines, and other challenges before the economy returns to normal, Mr. Barthalon said.
Mr. Powell, in testimony prepared for delivery at a congressional hearing Tuesday, said the Fed's actions to backstop credit markets this past spring had unlocked almost $2 trillion to support businesses, cities and states. Investors are likely to be watching for further insights into the pace and strength of the economic recovery when he takes questions from lawmakers. Treasury Secretary Steven Mnuchin is also expected to testify.
"Officials seem to be paying much more attention to the implementation risks than markets," Mr. Barthalon said. "There is clearly a contrast between market expectations and officials' expectations."
All 11 S&P 500 sectors rose Tuesday, led by economically-sensitive groups like energy and financials.
Among individual stocks, Tesla shares rose 4% after S&P Dow Jones Indices said it would add the car maker's full weight to the S&P 500 in one move.
Shares in Zoom Video Communications dropped 11%. The videoconferencing company on Monday signaled that higher sales in recent months have come with higher costs, disappointing investors.
Moderna shares jumped 12%, extending a rally that saw the stock climb 20% Monday after the drugmaker said it would ask U.S. and European health regulators to authorize use of its Covid-19 vaccine.
In bond markets, the yield on the benchmark 10-year U.S. Treasury note rose to 0.895%, from 0.845% on Monday.
Overseas, the pan-continental Stoxx Europe 600 rose 0.8%. Surveys on manufacturing activity in many major European economies on Tuesday showed a broad continued expansion in the eurozone.
"The manufacturing sector is one part of the European economy that is actually managing to retain some degree of resilience," said Michael Hewson, a chief markets analyst at CMC Markets. "Ultimately it is encouraging, but it doesn't tell us much about the more vulnerable sectors of the economy like services."
In Asia, most major benchmarks rose by the close of trading. The Shanghai Composite Index added 1.8%, Hong Kong's Hang Seng advanced 0.9% and Japan's Nikkei 225 climbed 1.3%.
A private gauge of manufacturing activity in China hit its highest level in a decade in November, signaling a strong recovery in the world's second-largest economy.
Karen Langley contributed to this article.
Write to Anna Hirtenstein at email@example.com
(END) Dow Jones Newswires