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Stocks Open Higher, Push Toward Fresh Records

12/01/2020 | 09:53am EST

By Anna Hirtenstein

U.S. stocks rose in early trading Tuesday, suggesting that the major indexes may notch fresh records.

The S&P 500 climbed 1% to 3658, erasing its muted losses from Monday and extending the November rally. The S&P 500 ended at an all-time closing high last week, its 26th for this year.

The Dow Jones Industrial Average rose 260 points, while the Nasdaq Composite Index added 0.6%.

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.

"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. He is scheduled to testify before Congress at 10 a.m. ET. 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."

Ahead of the market open, Tesla rose over 5% 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 over 7% premarket. The videoconferencing company on Monday signaled that higher sales in recent months have come with higher costs, disappointing investors. Moderna surged over 14%, extending a rally that saw the stock climb more than 20% on Monday.

Surveys of purchasing managers in the U.S., scheduled for release starting at 9:45 a.m. ET, are expected to show continued growth in the manufacturing sector in November.

A report on construction spending, due at 10 a.m., is expected to show it rose at a faster pace in October, echoing broader strength in the housing market.

The U.S. dollar continued to weaken against a basket of currencies, with the WSJ Dollar Index sliding 0.3% and hovering near its lowest in more than two years.

In bond markets, the yield on the benchmark 10-year Treasury note edged up to 0.872%, from 0.845% on Monday.

Overseas, the pan-continental Stoxx Europe 600 rose 0.7%. 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."

The U.K. was one of the best performing stock markets in Europe, with the FTSE 100 index rising 1.7%.

Among European equities, UniCredit retreated over 8% in Italy after Chief Executive Officer Jean Pierre Mustier said he would step down in April following a disagreement on strategic direction with the board.

Investors sold down government bonds in southern Europe after a European Central Bank policy maker, Isabel Schnabel, told Bloomberg News in an interview that the ECB shouldn't bend to market expectations and loosen policy much further. Investors have been betting that the ECB will announce a sizable extension to its bond-buying program on Dec. 10.

"Schnabel sounded somewhat hawkish," said James Athey, an investment manager at Aberdeen Standard Investments. "This close to an ECB meeting, with expectations high for a dramatic easing, a core member of the governing council saying that it's not the ECB's job to give markets what they want: that's done it."

The yield on Italy's benchmark 10-year bond rose to 0.627%, from 0.586% on Monday.

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.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

12-01-20 0952ET

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.57% 30996.98 Delayed Quote.1.86%
HANG SENG -1.66% 29441.63 Real-time Quote.8.12%
MSCI UNITED KINGDOM (STRD, UHD) -0.69% 1069.389 Real-time Quote.4.45%
NASDAQ 100 -0.29% 13366.396971 Delayed Quote.3.71%
NASDAQ COMP. 0.09% 13543.061633 Delayed Quote.4.99%
NIKKEI 225 -0.44% 28631.45 Real-time Quote.4.33%
S&P 500 -0.30% 3841.47 Delayed Quote.2.27%
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