Stocks Rally On Economic Recovery Hopes

Stock markets rallied Tuesday on economic recovery hopes fueled by upbeat Chinese data and expectations for Covid vaccines coming in 2021, though surging virus infections kept traders in check.

The S&P 500 and Nasdaq each surged to fresh records and European equities also notched strong gains, bolstered also by revived US stimulus prospects.

"That good feeling is back in the markets," said Craig Erlam, senior market analyst at OANDA Europe.

And Chris Beauchamp, chief market analyst at IG, said: "December has started on the front foot, with solid gains across the board for stock markets... as investors took heart from the China PMI numbers that showed there was a solid recovery in play in the world's manufacturing heart."

The European Medicines Agency said it would hold an extraordinary meeting on December 29 "at the latest" to consider emergency approval for a vaccine developed by Germany's BioNTech and US giant Pfizer.

The announcement further advances the timeframe to finally bring the pandemic under control after it dragged down the global economy.

France plans to prioritize the most fragile and exposed groups to receive the vaccine in early 2021, followed by a second campaign for the rest of the population between April and June, President Emmanuel Macron announced.

"For the first time since the pandemic began, there is now hope for a brighter future," OECD Chief Economist Laurence Boone wrote in an update on the global outlook that said vaccines could enable the economy to reach pre-pandemic levels by the end of next year.

Activity in China's factories expanded at its fastest pace in a decade last month, according to new data, the latest sign the world's second-biggest economy, where the coronavirus originated, is well on track to recovery.

Markets also were cheered by the revival of efforts on Capitol Hill to enact a fiscal package to support the coronavirus-ravaged US economy.

President-elect Joe Biden presented his economic team and called for immediate relief.

Janet Yellen, Biden's pick for Treasury secretary, warned that "inaction will produce self-reinforcing downturn causing yet more devastation."

"So many people struggling to put food on the table and pay bills and rent. It's an American tragedy," she said.

These developments helped counter worries about rising US coronavirus cases that public officials fear will worsen in the coming weeks once the toll from the Thanksgiving holiday surfaces.

"Even though we got even more positive vaccine-related news today, the short-term outlook remains uncertain, and it's still early to say that the autumn wave has already peaked," Gorilla Trades strategist Ken Berman said in a note.

"Hospitalizations hit yet another all-time high in the US and while infections are down compared to last week, we have to wait a few days to understand the impact of the holiday weekend om the numbers."