UKX FTSE 100 Index

By Caitlin Ostroff 

U.S. stocks opened higher on the final trading day of the holiday-shortened week, with investors focusing on the prospects for additional fiscal support and signs a slowing economic rebound.

The Dow Jones Industrial Average rose 61 points, or 0.2%, shortly after the opening bell. The S&P 500 added 0.2% and the Nasdaq Composite also climbed 0.2%.

Markets will close early Christmas Eve, with the New York Stock Exchange and Nasdaq scheduled to end trading at 1 p.m. ET. U.S. and European markets will be closed Friday.

Investors have been focused on a swath of issues this week, including the prospects for coronavirus-relief legislation and signs of the rebound faltering. Elevated coronavirus infection levels and a new variant of Covid-19 that emerged in the U.K. have prompted concerns that there may be additional lockdown measures in the winter months, weighing on market sentiment.

"The market is so on edge at the moment. People are worried about more lockdowns, more travel restrictions," said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. "This will continue to bounce the market around."

Bets that a fresh fiscal-stimulus package would offer support to families and small businesses in coming days have come into question after President Trump vetoed a $740.5 billion defense-policy bill on Wednesday and demanded last-minute changes to coronavirus-relief legislation. His unexpected criticism of the bill has prompted another standoff between the White House and Capitol Hill. Mr. Trump hasn't yet said if he will veto the aid package.

Weak recent economic data has bolstered hopes among investors that an agreement will be reached on the aid package. Data released Wednesday showed that household spending dropped for the first time in seven months and layoffs remained elevated as a surge in virus cases weighed on economic recovery.

"The market is definitely expecting an aid package to go through," said Mr. Kassam.

In bond marks, the yield on the 10-year Treasury note ticked down to 0.943%, from 0.953% Wednesday. Yields fall when bond prices rise.

Overseas, the pan-continental Stoxx Europe 600 edged up 0.2%, with markets in Germany and Italy shut until Monday.

The British pound rose against the dollar and the euro, as the U.K. and the European Union drew closer to a post-Brexit trade deal. Investors have said they would welcome greater clarity over trade relations. The U.K.'s stocks benchmark, the FTSE 100 index, closed up 0.1%, while the FTSE 250, which focuses on small and midsize companies, ended the day 1.2% higher.

Sterling has rallied in recent days as investors expected that a deal would be reached. "The market already had this as the base case," said Andreas Steno Larsen, global foreign-exchange and fixed-income strategist at Nordea Markets. "I don't think anyone really believed in the cliff-edge scenario."

The Turkish lira gained almost 1% against the dollar after Turkey's central bank increased its benchmark one-week repo rate to 17% from 15%. The currency has been one of the worst performers this year, having lost a fifth of its value against the dollar, and investors had grown worried that efforts to defend it were unsustainable.

"You can already see that the lira has stabilized," said Nikolay Markov, a senior economist at Pictet Asset Management. That is "a sign that investor sentiment was better than it was a month ago, before the first rate hike."

Most major stock indexes in Asia closed higher. South Korea's Kospi gained 1.7%, while Japan's Nikkei 225 advanced 0.5%. China's Shanghai Composite dropped 0.6%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

December 24, 2020 09:51 ET (14:51 GMT)

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