By Anna Hirtenstein 

U.S. stock futures ticked up Tuesday, suggesting that the major benchmarks may extend their rally a day after closing at records.

Futures tied to the S&P 500 rose 0.5%, while those linked to the Dow Jones Industrial Average advanced almost 0.6%. Both indexes closed at all-time highs on Monday. Contracts on the Nasdaq-100 index climbed 0.4%, signaling that technology stocks will also gain.

Stocks are powering higher in the final days of the year, driven in part by the cheap money unleashed by central banks and governments to shield the global economy from the coronavirus pandemic. The S&P 500 index has climbed over 15% this year, building on its 29% surge in 2019, while the Nasdaq Composite Index has gained over 43% in 2020 alone.

"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.

Investor sentiment also got a boost after 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. Senate Majority Leader Mitch McConnell (R., Ky.) hasn't commented on whether he will take up the bill.

"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.

The WSJ Dollar Index, which tracks the U.S. currency against a basket of others, fell 0.3% to its lowest level in over a week.

In bond markets, the yield on the benchmark 10-year Treasury ticked up to 0.945%, from 0.932% on Monday.

Meanwhile , the coronavirus pandemic continues to rage on with hospitalization rates in the U.S. surging to a new high on Monday. Intensive care units are also coming under pressure.

"There is this combination of lockdowns, the virus spreading and new strains, but investors are still emphasizing the positive news flow over this," said Jeroen Blokland, head of multiasset at Robeco.

Overseas, the pan-continental Stoxx Europe 600 added 1%.

In the U.K., where markets reopened Tuesday for the first time since shutting early on Thursday afternoon, the main FTSE 100 stocks benchmark rose 2.5% 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.

Among European equities, AstraZeneca jumped 4.6% on reports that the pharmaceutical company's Covid-19 vaccine may be approved by the U.K. government in coming days.

In Asia, most major benchmarks climbed by the close of trading. 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."

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

 

(END) Dow Jones Newswires

December 29, 2020 05:33 ET (10:33 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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