NEW YORK, Jan. 2 (Xinhua) -- U.S. stocks traded higher in the morning session Tuesday, the first trading day of 2018, as Wall Street looks to start off the new year on a high note.

By midday, the Dow Jones Industrial Average rose 51.18 points, or 0.21 percent, to 24,770.40. The S&P 500 added 16.17 points, or 0.60 percent, to 2,689.78. The Nasdaq Composite Index gained 83.69 points, or 1.21 percent, to 6,987.08.

Investor sentiment was boosted by the prospect of the U.S. tax reform. The tax bill, which was signed into law by U.S. President Donald Trump later last month, would cut the corporate income tax rate to 21 percent from the 35 percent and lower individual income rates. The tax bill became effective from January, 2018.

Analysts said optimism over U.S. markets has been rising despite valuations that are seen as stretched by many measures.

On the economic front, the seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers' Index (PMI) registered 55.1 in December, up from 53.9 in November and notching the highest level since March 2015.

U.S. stock markets were closed Monday for the New Year's Day.

U.S. stocks had a banner year in 2017, with all three major indexes posting their best annual gains since 2013 and notching all-time highs.

The broader S&P 500 surged about 19.4 percent last year, with technology and consumer discretionary the top two performers.