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Wall Street showed signs of a Santa rally on Tuesday, with the Nasdaq closing at a record high, helped by optimism about a potential government stimulus to protect the economy from the coronavirus pandemic. The Dow closed up more than 330 points.

The Canadian market also rose, getting a boost from higher commodity prices. The S&P/TSX Composite Index closed up 119.08 points, or 0.68%, at 17,506.48. The materials sector led the charge, with a 2.11% advance, as gold prices gained. The real estate sector also outperformed the broader market, rising 1.58%, and energy stocks rose 0.94%. Transat A.T. was a highlight of the session, rallying 17.58% after its shareholders voted for the second time in favour of Air Canada’s takeover offer, this time accepting a price steeply reduced by the pandemic’s collapse in air travel.

After the close of trading, Air Canada raised its fourth-quarter cash burn estimate and said it would offer about C$850 million worth of shares to boost liquidity.

On Wall Street, Apple Inc was the top boost to all three U.S. benchmarks, surging 5% to its highest since September after a report said it plans to increase iPhone production by 30% in the first half of 2021.

The Russell 2000 index of smaller companies surged about 2.4% to a record high. It was the strongest day since Nov. 24 for the S&P 500 and the Dow Jones Industrial Average.

Some investors viewed the recent spike in coronavirus infections and deaths, along with a grim November employment report, as an impetus for a quick deal on a COVID-19 stimulus bill, with economically sensitive sectors such as consumer discretionary, materials leading gains.

The S&P 500 utilities index rose almost 2% and logged its strongest one-day gain since early November.

“They have lagged, and you could see a little bit of rotation of people looking for yield,” said 6 Meridian Chief Investment Officer Andrew Mies, referring to utilities stocks.

Broad gains across the stock market were a healthy sign, Mies added.

U.S. House Speaker Nancy Pelosi invited top congressional leaders to meet later on Tuesday in an effort to finalize a massive government spending deal and reach an agreement on a new package of coronavirus relief.

The Fed is also expected to signal low-interest rates for the foreseeable future in its two-day meeting starting Tuesday. The recent coronavirus vaccine roll-out is expected to improve the central bank’s 2021 outlook.

Unofficially, the Dow Jones Industrial Average rose 1.13% to end at 30,199.31 points, while the S&P 500 gained 1.29% to 3,694.62.

The Nasdaq Composite climbed 1.25% to end at 12,595.06, exceeding its previous record high close on Dec. 8.

Supported by Apple, the S&P 500 technology sector index rallied 1.6%. The sector has outperformed the broader market during the pandemic and is up over 35% year to date, with investors viewing it as resilient to virus-related disruptions.

“The market likes to go to tech when it is afraid the economy may stall because of a rise in infections and shutdowns,” said Christopher Grisanti, chief equity strategist at MAI Capital Management.

Increased liquidity and ultra-low lending rates have sent investors flocking to stocks for during the COVID-19 pandemic, while recent optimism over a vaccine pushed the S&P 500 to a series of record highs last week.

“We have prices up and earnings down and we still have a risk to the economy out there, so that’s where the potential challenge is,” warned Mike O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut. “Investors have to be more tactical, look at more of that value space that probably offers more opportunity as the recovery unfolds.”

Eli Lilly and Co jumped 6% after the company said it would buy Prevail Therapeutics Inc in a deal potentially valued at $1 billion to expand its presence in the lucrative field of gene therapy. Prevail’s shares surged 82%.

Moderna Inc’s shares tumbled 5%, even after U.S. Food and Drug Administration staff members did not raise any new concerns over data on the drugmaker’s COVID-19 vaccine. A report said the vaccine will gain emergency use approval on Friday.

Longer-term U.S. Treasury yields were higher on Tuesday as U.S. central bank officials began a two-day meeting and investors looked for progress in congressional spending negotiations in Washington.

The benchmark 10-year yield was up 2.7 basis points in afternoon trading at 0.9179%.

Gold gained more than 1%, bolstered by expectations of more coronavirus relief aid.

Spot gold prices rose $25.9401 or 1.42%, to $1,853.11 an ounce.

U.S. gold futures settled up 1.3% at $1,855.30.

“There is the possibility of getting stimulus passed and that is what the gold market has been waiting for,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

Oil prices rose as investors focused on COVID-19 vaccine rollout, looking past the tightening of lockdowns in Europe and forecasts for a slower-than-expected recovery in fuel demand.

Brent crude settled up $0.47, or 0.93%, at $50.76 a barrel. U.S. crude settled up $0.63, or up 1.34%, at $47.62 per barrel.

“The crude market continues to seize upon the future outlook of the post-pandemic period, which could be as soon as next summer. A lot of us in the market sense the demand is lurking,” said John Kilduff, partner at Again Capital in New York.

Advancing issues outnumbered declining ones on the NYSE by a 3.24-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 181 new highs and 19 new lows.

Volume on U.S. exchanges was 10 billion shares, compared with the 11.5 billion average for the full session over the last 20 trading days.

Read more: Stocks that saw action Tuesday - and why

Reuters, Globe staff

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