Wall Street drifts higher as focus turns to Georgia runoffs

Wall Street's main indexes were up after a weak start on Tuesday as investors waited for the outcome of Georgia's Senate runoff elections, which are expected to determine the balance of power in Washington.

While a "blue sweep" of Congress could usher in greater fiscal stimulus to aid the coronavirus-ravaged economy, it could also pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes, hurting some areas of the market.

"Investors are taking a wait-and-see attitude ... there's a lot to be concerned about - not only in the US with the elections but also because of the different strains of the virus that are now being reported around the globe," CFRA chief investment strategist Sam Stovall said.

The latest polls from data website 538 gave a slight edge to the two Democratic challengers in their respective races.

The Cboe Volatility Index flip-flopped after closing at its highest level in two months in the prior session, which saw Wall Street's main indexes drop to two-week lows on concerns over a persistent surge in coronavirus cases.

All major S&P sectors were higher, with energy stocks surging about 2% on the back of higher oil prices.

The dividend-paying defensive sectors - consumer staples , utilities and real estate - were the laggards.

At 09:48 a.m. ET the Dow Jones Industrial Average rose 125.12 points, or 0.41%, to 30,349.01, the S&P 500 gained 16.43 points, or 0.44%, to 3,717.07 and the Nasdaq Composite gained 74.48 points, or 0.59%, to 12,772.93.

Although the start of vaccine rollouts and massive monetary support powered the major US stock indexes to record levels recently, the discovery of a more contagious strain of the coronavirus and the latest virus-related curbs have muddied the economic outlook.

Britain began its third national lockdown to fight the spread of a highly contagious variant that threatens to overwhelm the healthcare system. Meanwhile, New York on Monday found its first case of the "UK" variant.

"The market could end up being choppy for much of the first quarter as investors try to digest soft economic data because of the most current lockdowns," Stovall said.

ISM survey showed US manufacturing activity rose to its highest level in nearly 2-1/2 years in December, likely as spiraling new COVID-19 infections pulled demand away from services towards goods.

Chipmaker Micron Technology Inc rose about 5% after Citigroup raised its rating on the stock to "buy" on expectations of a recovery in demand and pricing for DRAM chips.

US-listed shares of China Telecom Corp Ltd and China Mobile Ltd added about 10% each, while those of China Unicom Hong Kong Ltd advanced 16% after the NYSE reversed its decision to delist the stocks.

Advancing issues outnumbered decliners by a 2.6-to-1 ratio on the NYSE and by a 2.4-to-1 ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and no new lows, while the Nasdaq recorded 54 new highs and two new lows.