U.S. stock index futures pointed to a slightly higher start on Tuesday, building on gains in the record-setting rally into the year-end.

Futures on the Dow Jones Industrial Average were up about 20 points, pointing to a higher open of more than 8 points. Futures on the S&P 500 and Nasdaq Composite were higher too. Trading is expected to be muted in Christmas Eve trading and the market will be closed at 1 p.m. ET.

The three major averages all posted record closes on Monday. The S&P 500 has risen 2.6% for December and 8.3% for the quarter. It is also on pace for its best annual performance in six years, up 28.6% for 2019 through Monday’s close. If the benchmark ends the year up 31%, it will score the best year since 1997.

“The equity narrative is the same as it was at Monday’s close and probably will stay unchanged for the remaining 1.5 weeks of 2019,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “But investors will return in January to find a complacent market trading at very elevated multiples and harboring unrealistically optimistic expectations about an upward inflection in growth/earnings momentum.”

The S&P 500 is currently trading at about 18 times forward earnings, the highest level since January 2018, according to FactSet.

Tuesday marks the official start of the Santa Claus rally period, which happens on the final five trading days of the year and the first two tradings days of the new year. Stocks tend to have unusually strong performance during those trading days with the S&P 500 averaging a 1.3% gain since 1950, according to the Stock Trader’s Almanac.

Investors cheered the news this week that China is taking action to goose its economy. The country said it will boost imports by cutting tariffs on over 850 products. The Chinese government also said it would study additional cuts in the bank reserve-ratio requirements. The moves come as China and the U.S. agreed on a phase one trade deal and are working to ink the agreement.

On the data front, Richmond Fed manufacturing surveys are due at 10 a.m. ET.

The U.S. stock market is closed on Wednesday for Christmas. Thursday and Friday are regular trading days.

—CNBC’s Spriha Srivastava contributed to this report.

Read More