U.S. Stocks Rise as Investors Track Stimulus Talks

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

The S&P 500 rose 47.13 points, or 1.3%, to 3694.62, snapping a four-session losing streak, the index’s longest stretch of losses since late September. The Dow Jones Industrial Average gained 337.76 points, or 1.1%, to 30199.31.

And the tech-heavy Nasdaq Composite jumped 155.02 points, or 1.2%, to 12595.06—a new all-time-high that marks the index’s 51st record close of the year.

Enthusiasm that U.S. lawmakers may be closer to a stimulus deal helped lift stocks, which have largely swung between small gains and losses since finishing November with blockbuster gains. The top four congressional leaders are expected to meet Tuesday afternoon to discuss a coronavirus relief package and a year-end spending bill.

Democratic and Republican lawmakers have been at an impasse over a stimulus deal, but on Monday, a bipartisan group of lawmakers urged Congressional leaders to forge ahead with a $748 billion aid package that would avoid the thorniest issues holding up a deal.

Investors have been closely monitoring prospects for additional stimulus, especially as the potential for further Covid-19 lockdowns in the months ahead has grown. Despite the initial rollout of a Covid-19 vaccine by


and BioNTech in the U.S. on Monday, the country is still facing a winter that could be difficult as Covid-19 cases continue to rise.

The S&P 500 looked to buck a recent trend of daily declines.


angela weiss/Agence France-Presse/Getty Images

“The [vaccine] news is here and now the market is just digesting some of these [November] gains and looking for the next catalyst as we move into next year,” said

Keith Lerner,

chief market strategist at Truist Advisory Services.

In corporate news, shares of


climbed after Nikkei Asia reported that the company plans to produce up to 96 million iPhones in the first half of next year, a nearly 30% year-over-year jump. Shares of the iPhone maker rallied $6.10, or 5%, to $127.88.

Energy stocks, banks and materials companies also rallied, while the Russell 2000 index of small-company stocks jumped 2.4%. The index’s 17% gain for the year is currently outpacing the S&P 500’s 14% rise.

In contrast, shares of several vaccine-makers tumbled. Pfizer fell 50 cents, or 1.3%, to $38.71, while


slid $7.85, or 5.1%, to $147.22.

The Food and Drug Administration said Tuesday that Moderna’s Covid-19 shot is “highly effective,” suggesting it could soon be added to the arsenal against the pandemic. Shares of the company have experienced a significant run-up this year. Even with Tuesday’s losses, Moderna remains up more than 650% year-to-date.

On Monday, the Covid-19 death toll in the U.S. surpassed 300,000, underscoring that despite ongoing advances in coronavirus medical treatments and vaccines, the pandemic still threatens to continue to be a drag on the U.S. economy. Officials in Boston and other nearby cities and towns are tightening Covid-19 restrictions this week, including closing businesses such as movie theaters for at least a few weeks in an attempt to combat rising Covid-19 cases.

“The market is having to deal with a lot of headwinds,” said

Hani Redha,

a portfolio manager at PineBridge Investments. “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.

“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 U.S. Treasury note rose to 0.921%, from 0.891% on Monday.

Lawmakers working to pass a coronavirus-aid bill face two sticking points: aid for state and local governments and liability protections. WSJ’s Gerald F. Seib explains why these issues matter and what a compromise might look like. Photo: Drew Angerer/Getty Images

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. However, output overall in November remained about 5% below February levels before the pandemic, the Fed said.

In overseas markets, the regionwide Stoxx Europe 600 index ticked up about 0.3%. 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 nears the end of the year. Industrial output rose 7% from a year earlier, faster than economists were expecting.

Write to Joe Wallace at Joe.Wallace@wsj.com and Caitlin McCabe at caitlin.mccabe@wsj.com

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