By Joe Wallace

U.S. stocks opened higher Tuesday as investors cautiously welcomed signs of progress in negotiations over an economic relief package in Washington.

The S&P 500 rose 0.7%, suggesting the benchmark stocks gauge may buck the recent trend after falling for a fourth consecutive day on Monday. The technology-heavy Nasdaq Composite Index ticked up 0.8%, while the Dow Jones Industrial Average added 183 points, or 0.6%.

A bipartisan group of lawmakers urged Congressional leaders on Monday to forge ahead with a $748 billion-spending package that would avoid the thorniest issues holding up a deal. Investors have been closely monitoring prospects for a fresh stimulus bill offering support to households and businesses hit by the Covid-19 pandemic. Congress is running out of time to strike a deal before the year-end holiday season.

"It's very tight," said Hani Redha, a portfolio manager at PineBridge Investments. "There are decent odds we will still get something in the lame-duck session, which would obviously be a great bridge over to the spring."

Ahead of the opening bell in New York, shares in Apartment Investment & Management tumbled around 75%. The real-estate investment trust is due to be replaced by electric-vehicle maker Tesla in the S&P 500 index later this month.

Shares in Eli Lilly rose more than 1.5% in premarket trading after the drugmaker said Covid-19 treatment sales would boost earnings in 2021. Moderna shares rose 1.2% after the Food and Drug Administration said the company's Covid-19 vaccine is highly effective, suggesting the shot could soon be added to the arsenal against the pandemic.

Stocks have wavered in recent days amid signs that soaring Covid-19 cases and mounting restrictions in the U.S. and Europe are crimping the global economic recovery.

"The market is having to deal with a lot of headwinds," said Mr. Redha. "Both on the virus itself, the risk of tighter and tighter lockdowns, and uncertainty around any kind of additional stimulus in the U.S."

"It will be a slower recovery without it," Mr. Redha said, referring to a new relief package.

Still, many money managers hope that vaccines, coupled with continuing support from central banks, will allow the rally in stocks and corporate bonds to extend into 2021. Additional support from the U.S. government could offer more buoyancy to markets in what may be a difficult few months as death tolls rise and many businesses continue to suffer.

"The jury's still a little bit out on exactly what's going to be passed here," said Lyn Graham-Taylor, senior rates strategist at Rabobank. "The U.S. does need some more fiscal stimulus to see it through these winter months."

Treasury yields are likely to jump if U.S. lawmakers do pass a significant stimulus package, lifting growth, inflation prospects and the supply of bonds, Mr. Graham-Taylor added.

The yield on 10-year Treasury notes edged up to 0.906%, from 0.891% on Monday. Meanwhile the WSJ Dollar Index, which tracks the U.S. currency against a basket of others, slipped 0.2%.

U.S. industrial production grew 0.4% in November from a month earlier, the Federal Reserve said, indicating a continuation of the recovery in output by factories, mines and utilities. The expansion was slightly faster than economists polled by FactSet had expected.

In overseas markets, the regionwide Stoxx Europe 600 index ticked up less than 0.2%. Gains for auto makers and car-part manufacturers offset losses for health-care stocks, utilities and retailers including Sweden's H&M Hennes & Mauritz.

Shares in Volkswagen rose over 6% after the German car maker's top shareholders and union leaders backed Chief Executive Herbert Diess's strategy to refocus on electric vehicles.

China's Shanghai Composite Index ended 0.1% lower in a mixed session for Asian stocks. Japan's Nikkei 225 slipped 0.2%.

China's economic recovery continued apace in November, data from the National Bureau of Statistics showed, putting the world's second-largest economy on a stronger footing as it approaches the end of a tumultuous year. Industrial output rose 7% from a year earlier, faster than economists were expecting.

Write to Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

12-15-20 0946ET