UKX FTSE 100 Index

By Anna Hirtenstein and Gunjan Banerji 

U.S. stocks slipped Tuesday, halting a recent rally that has sent major benchmarks to fresh records.

Stock indexes swung between gains and losses throughout the day before ending with small declines. The S&P 500 slipped 8.32 points, or 0.2%, to 3727.04. The Dow Jones Industrial Average lost 68.30 points, or 0.2%, to 30335.67. The Nasdaq Composite dropped 49.20 points, or 0.4%, to 12850.22. All three indexes closed at all-time highs Monday.

The Russell 2000 of small companies logged a steeper decline, losing 1.9%.

Stocks lost some momentum after Senate Majority Leader Mitch McConnell blocked an effort by Democrats to hold a vote on sending bigger stimulus checks to many Americans.

Much of the latest leg of the market's rally has been driven by U.S. lawmakers' efforts to pass a second stimulus package to help the economy. Trading volumes are also typically thinner in the final days of the year with many people on vacation, which can potentially amplify market moves.

The House of Representatives on Monday approved a bill proposing to increase the size of stimulus checks to $2,000 from $600, though the bill's fate remains uncertain in the Senate. Without committing to hold a vote, Mr. McConnell said Tuesday that the Senate would later address Mr. Trump's demands to boost the size of the checks.

The coronavirus continues to spread through the U.S. and many Americans remain in need of economic relief.

"There might be more stimulus, but the $2,000 mark might be a hard one to pass," said Veronica Willis, an investment strategy analyst at Wells Fargo Investment Institute.

One bright spot in the economy continues to be housing. Fresh data released Tuesday showed that home-price growth accelerated in October, as strong demand pushed home sales to a 14-year high.

In corporate news, shares of Intel rose $2.32, or 4.9%, to $49.39 after activist hedge fund Third Point called on it to consider options including possible divestitures.

Shares of social media company Snap added $2.97, or 6.2% to $51.23 after Goldman Sachs raised its price target on the company's shares.

Overseas, the pan-continental Stoxx Europe 600 added 0.8%. In the U.K., where markets reopened Tuesday, the main FTSE 100 stocks benchmark rose 1.5% as investors cheered the post-Brexit deal struck on Christmas Eve. British and European Union officials reached an agreement that includes a free-trade accord, bringing to an end over four years of uncertainty.

"The Brexit deal will help risk sentiment. As investors come back to the office for the first time since Christmas, people are looking into the details of the deal," said James Athey, investment manager at Aberdeen Standard Investments.

In Asia, most major benchmarks climbed. Japan's Nikkei 225 index rose 2.7%, ending the day at a 30-year high. Hong Kong's Hang Seng Index added 1%, while the Shanghai Composite Index edged down 0.5%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

December 29, 2020 16:53 ET (21:53 GMT)

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