By Anna Hirtenstein and Karen Langley

U.S. stocks rose Tuesday, giving the S&P 500 and Nasdaq Composite Index fresh records, as the optimism behind the November market rally extended into a new month.

The broad S&P index gained 1.1%, while the tech-heavy Nasdaq added 1.3%, both hitting closing records as of 4 p.m. ET. The Dow Jones Industrial Average advanced 0.6%, or about 185 points, to 29824, after 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 38%.

Investors' sentiment has been buoyed in recent weeks by promising reports on the development of Covid-19 vaccines, which could curtail infection levels and let social and business activity return to pre-pandemic levels.

"That news was so much more positive than I think people expected," said Elliott Savage, portfolio manager of YCG Enhanced Fund. "To have two come out that were 90 and 95% effective, I think that just was a very big change in expectations for how quickly the economy can get back to quote-unquote normal."

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.

In another potential positive for the markets, on Tuesday negotiations in Washington over additional coronavirus relief showed signs of resuming. Investors have closely followed developments that could lead to more economic stimulus.

Tuesday's gains were broad, with all 11 sectors of the S&P 500 gaining ground. A wide range of stocks have powered the recent rally, meaning that major indexes have been less reliant on a few highflying companies to lift them higher.

The broadening of market participation is a healthy sign, said Lauren Hill, portfolio manager at Westwood Holdings Group.

"I think that means that more people believe that the recovery is taking shape with the vaccine announcements that we've had in the last few weeks," she said. "People are looking ahead to 2021 with optimism."

Among individual stocks, Tesla shares rose 2.6% after S&P Dow Jones Indices said it would add the car maker's full weight to the S&P 500 in one move before the start of trading on Dec. 21.

Shares in Zoom Video Communications dropped 15%. The videoconferencing company on Monday signaled that higher sales in recent months have come with higher costs, disappointing investors.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note rose to 0.928%, 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."

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 and Karen Langley at karen.langley@wsj.com

(END) Dow Jones Newswires

December 01, 2020 16:19 ET (21:19 GMT)

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