By Shubham Batra and Amruta Khandekar
(Reuters) - Wall Street's main indexes kicked off the last week of the year on a positive note on Tuesday as growing bets of early rate cuts by the Federal Reserve lifted investor sentiment after Christmas holidays.
All S&P 500 sub indexes were in the green, except healthcare, with the benchmark index close to breaching its record closing high touched in January 2022.
A close above that level will confirm the benchmark index has been on a bull run since bottoming out in October 2022.
Trading volumes are, however, likely to remain low during this week with most market participants away on year-end holidays.
U.S. stocks closed higher on Friday after the Commerce Department's Personal Consumption Expenditures (PCE) report showed inflation continues to meander down toward the Fed's average annual 2% target.
The three main indexes also logged their eighth consecutive weekly gains on Friday following the report, the longest winning streak for the S&P 500 since late 2017.
The only key economic data expected this week is the jobless claims report on Thursday and no Fed officials are scheduled to speak.
"It's going to be a fairly quiet trading session. The momentum stays towards the upside, but I don't think we're going to see any strong volume that would suggest we could be in for a strong rally," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"We had a good inflation number on Friday. If inflation continues to move down in January and February, there's a good chance that the Fed may cut (rates) earlier than anticipated."
Traders' bets that the central bank will deliver a rate cut of at least 25 basis points in March 2024 stand at 86%, compared with about 21% in November, according to the CME Group's (NASDAQ:CME) FedWatch tool.
At 9:40 a.m. ET, the Dow Jones Industrial Average was up 43.65 points, or 0.12%, at 37,429.62, the S&P 500 was up 10.63 points, or 0.22%, at 4,765.26, and the Nasdaq Composite was up 57.15 points, or 0.38%, at 15,050.12.Shares of Manchester United (NYSE:MANU) rose 2.0% after billionaire Jim Ratcliffe struck a long-awaited deal to buy a 25% stake in the football club at $33 per share.
Among other movers, Gracell Biotechnologies shot up 59.6% after AstraZeneca (NASDAQ:AZN) said on Tuesday it will buy the China-based firm for up to $1.2 billion as the Anglo-Swedish pharma company furthers its cell therapy ambitions.
Intel Corp (NASDAQ:INTC) rose 2.9% after Israel's government agreed to give it a $3.2 billion grant for a new $25 billion chip plant it plans to build in southern Israel, both sides said on Tuesday.
Crypto-related stocks such as Marathon Digital (NASDAQ:MARA), Bitfarms and Riot Platforms (NASDAQ:RIOT) fell between 1.8% and 2.7% after Bitcoin slid over 2%.
Advancing issues outnumbered decliners by a 1.98-to-1 ratio on the NYSE and by a 1.64-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and no new lows, while the Nasdaq recorded 73 new highs and 10 new lows.