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* Markets rise on recovery hopes
* Tesla up on report of India entry next year
* Airlines, cruise operators climb
* Dow up 0.73%, S&P 500 up 0.94%, Nasdaq up 0.89% (Updates to mid-afternoon, changes byline)
NEW YORK, Dec 28 (Reuters) - U.S. stocks rose on Monday, with each of Wall Street’s main indexes touching record levels as President Donald Trump’s signing of a long-awaited $2.3 trillion pandemic aid bill increased optimism for an economic recovery.
In a sudden reversal late on Sunday, Trump backed down from his threat to block the hard-fought bill, restoring unemployment benefits to millions of Americans and averting a federal government shutdown.
“Stocks are riding the coattails of the additional stimulus program and that is for good reason,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota.
“You’ve still got monetary and fiscal stimulus that is in motion and that clearly provides economic stability, medical progress for COVID-19 continues to evolve and that will unfold at a more accelerated rate now as you get into the new year and importantly, the macro environment is favorable for stocks,” he said.
The Dow Jones Industrial Average rose 219.36 points, or 0.73%, to 30,419.23, the S&P 500 gained 34.95 points, or 0.94%, to 3,738.01 and the Nasdaq Composite added 114.10 points, or 0.89%, to 12,918.84.
Stocks battered by coronavirus lockdowns, such as airlines and cruise lines, advanced. The S&P 1500 airlines index added 1.5% as carriers are set to receive $15 billion in addition payroll assistance under the new government aid.
Cruise operators Royal Caribbean Cruises Ltd, Carnival Corp and Norwegian Cruise Line Holdings Ltd each rose by at least 4%
On a sector basis, gains were led by communication services , consumer discretionary and tech as each posted gains of more than 1%.
After a sharp recovery from a coronavirus crash in March, the S&P 500 is on track to rise more than 15% this year on the back of a loose monetary policy, high liquidity and a COVID-19 vaccine program.
Despite the generally favorable conditions for equities, worries over a resurgence in coronavirus cases, upcoming U.S. Senate runoffs in Georgia and stretched valuations could become headwinds. The forward price-to-earnings ratio of the S&P is currently about 22.2, well above its long-term average of 15.3.
Trading volumes are expected to be thin in the final week of the year that has historically been a seasonally strong period for equities.
Democrats in the U.S. Congress on Monday will put to vote a proposal for higher pandemic relief payments for Americans, although it appears unlikely to gain traction in the Republican-controlled Senate.
Adding to a global appetite for risk, Britain and the European Union clinched a lean post-Brexit trade deal on Thursday, while a mass COVID-19 vaccination drive in Europe was launched over the weekend.
Tesla Inc advanced 0.90% after a report that the electric-car maker will start operations in India early next year.
Lockheed Martin Corp edged up 0.41% after the fighter jet maker said it delivered 123 F-35 jets in 2020, near the top end of its revised outlook.
Advancing issues outnumbered declining ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.29-to-1 ratio favored advancers.
The S&P 500 posted 35 new 52-week highs and no new lows; the Nasdaq Composite recorded 234 new highs and 13 new lows. (Reporting by Chuck Mikolajczak; Editing by Aurora Ellis)