U.S. stocks rose, led by gains in tech shares and small caps, with Wall Street parsing the latest earnings ahead of a flood of reports this week.

The S&P 500 Index rebounded from Friday’s selloff after a three-day weekend that brought little by means of fresh macro news. Ten-year Treasury yields climbed back toward 1.1 per cent and the dollar weakened. Crude oil and emerging markets also advanced. Goldman Sachs Group Inc. turned lower even after reporting that profit more than doubled. Bank of America Corp. shares edged higher after its results. General Motors Co. rose to a record after Microsoft Corp. invested in its self-driving car startup. Netflix Inc. reports results after markets close.

Janet Yellen encountered early Republican resistance to President-elect Joe Biden’s US$1.9 trillion COVID-19 relief plan in her confirmation hearing to become Treasury secretary. Donald Trump is in the final hours of his term, with Biden to be sworn in at noon Wednesday in Washington.

The market moves on Tuesday show that investors are coming back to the reflation trade, betting that the incoming U.S. administration will use its legislative firepower to propel economic growth. Biden’s stimulus package includes measures like a minimum-wage hike and substantial expansion in family and medical leave -- programs that have already triggered Republican opposition.

“Yellen is a positive,” said Mohit Kumar, strategist at Jefferies International. “We should have greater co-operation between the Fed and the Treasury, with both the monetary and fiscal policy working together and supportive. This is a good backdrop for risk sentiment.”

In Asia, Hong Kong stocks closed at the highest level since May 2019. A spending spree by mainland investors is powering gains, lifting the Hang Seng Index up 2.7 per cent on Tuesday.

Signs suggest that mainland buying will continue, with investors shifting out of A shares to buy those listed in Hong Kong. The benchmark Hang Seng Index is still cheaper than the Shanghai Composite gauge in terms of price-to-earnings multiples.

Here are the main moves in markets:

Stocks

The S&P 500 Index jumped 0.8 per cent as of 4 p.m. in New York.
The Stoxx Europe 600 Index lost 0.2 per cent.
The MSCI Asia Pacific Index increased 1.2 per cent.
The MSCI Emerging Market Index increased 1.6 per cent.

Currencies

The Bloomberg Dollar Spot Index declined 0.2 per cent.
The euro climbed 0.4 per cent to US$1.2124.
The British pound increased 0.3 per cent to US$1.3631.
The Japanese yen weakened 0.2 per cent to 103.89 per dollar.

Bonds

The yield on 10-year Treasuries was little changed at 1.09 per cent.
The yield on two-year Treasuries slipped to 0.13 per cent.
Germany’s 10-year yield advanced one basis point to -0.526 per cent.

Commodities

West Texas Intermediate crude advanced 1.2 per cent to US$53.01 a barrel.
Gold futures added 0.5 per cent to US$1,838.80 an ounce.