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Stocks rose on Tuesday, recovering some of their sharp losses from the previous session, as traders made bets for a strong global economic recovery.

The Dow Jones Industrial Average closed 167.71 points higher, or 0.6%, at 30,391.60.

The S&P 500 advanced 0.7% to 3,726.86, and the Nasdaq Composite climbed nearly 1% to 12,818.96.

Sentiment also got a boost from stronger-than-expected U.S. manufacturing data. The Institute for Supply Management said its manufacturing index rose to 60.7 in December — its highest level since August 2018 — from 57.5 in November. Economists polled by Dow Jones expected the index to come in at 57.

Copper — traditionally seen as a leading indicator for the global economy — popped more than 2% and hit its highest level in nearly eight years.

Investors also looked ahead to two key elections in Georgia, which will determine whether Republicans can hold on to control in the Senate. Many fear that increased tax rates and more progressive policies could weigh on the market if Democrats gain control of the Senate.

However, such an outcome could create an opportunity for a bigger and faster spending package.

“Today’s Georgia Senate runoff could have substantial implications for the markets if both Democrat candidates win,” wrote Tom Essaye, founder of The Sevens Report. “We don’t view a Democrat Senate as a bearish game changer in the short term because there would still be a lot of positives in this market. But it would be a new and unaccounted for initial head-wind on stocks.”

U.S. stock futures open flat as traders await results from Georgia runoff elections

U.S. stock futures were flat on Tuesday night as Wall Street kept an eye on two runoff elections in Georgia that will determine control of the Senate.

Dow Jones Industrial Average futures dipped 20 points, or 0.1%. S&P 500 also slipped 0.1%, and Nasdaq 100 futures rose marginally.

Republican Senators Kelly Loeffler and David Perdue are facing Democratic challengers Rev. Raphael Warnock and Jon Ossoff, respectively. If both Democrats win, that would make a 50-50 tie in the upper chamber, with Vice President-elect Kamala Harris as the tiebreaker vote to give the party control of the Senate.

Some on Wall Street fear that a Democrat-controlled Senate could lead to higher corporate taxes and tougher regulations on companies, which could weigh on the broader market. However, this outcome could also facilitate the passing of additional fiscal stimulus, which could give a boost to companies hit hardest by the coronavirus pandemic.

Oppenheimer’s John Stoltzfus said in a note Monday that the S&P 500 could suffer a 10% correction if both Democratic candidates win the runoff elections.

But Mark Haefele, CIO at UBS Global Wealth Management, thinks ultra-progressive legislation being pushed through is not a guarantee even if the Democratic candidates win the runoffs.

“The best the Democrats can do is a 50-50 split in the Senate, and their caucus includes some moderates who would not necessarily vote for all of Biden’s policy proposals,” said Haefele in a note. “Another point to consider is that there will be a midterm election in 2022, and the sitting president’s party typically loses seats in Congress.”

“Democrats will have to fear that if they are too aggressive in forcing their agenda through Congress on a strictly partisan basis, they could potentially lose their majorities in both houses,” he said.