The S&P 500 retreats, crude gains as vaccine hopes boost recovery bets

NEW YORK (Reuters) – The S&P 500 and the Nasdaq retreated on Tuesday and oil prices extended the previous session’s surge as promising developments toward an effective COVID-19 vaccine led investors away from market leaders and toward cyclical stocks associated with economic recovery.

The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, U.S., November 10, 2020. REUTERS/Carlo Allegri

The blue-chip Dow, buoyed by industrial shares, gained ground and crude advanced as investors bet on a demand rebound.

Pfizer Inc PFE.N announced on Monday that its COVID-19 vaccine candidate, developed with German partner BioNTech BNTX.O, showed in trials it had a 90% success rate in preventing infection.

The development led to investors taking profits from market-leading tech stocks that have thrived amid the pandemic recession.

“The rotation away from COVID beneficiaries to beneficiaries of a more open economy continues today,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “Some of the things that were expensive and tied to the work-from-home economy seem to be suffering a bit.

“The Pfizer news really surprised everyone yesterday and put a light at the end of the tunnel,” Tuz added. “That tunnel may be 12 months long or 6 months long, but it suggests that life is going to get back to what it was before COVID started.”

The Dow Jones Industrial Average .DJI rose 230.92 points, or 0.79%, to 29,388.89, the S&P 500 .SPX lost 6.6 points, or 0.19%, to 3,543.9 and the Nasdaq Composite .IXIC dropped 157.55 points, or 1.35%, to 11,556.23.

European shares extended their gains on lingering vaccine optimism and news that EU negotiators have agreed on a budget, a crucial step toward activating the bloc’s 1.8 trillion euro recovery package.

The pan-European STOXX 600 index .STOXX rose 0.90% and MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.02%.

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Emerging market stocks lost 1.11%. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.68% lower, while Japan’s Nikkei .N225 rose 0.26%.

U.S. Treasury yields inched higher on Tuesday in choppy trading, consolidating the previous session’s gains due to economic optimism in the wake of positive news on a potential coronavirus vaccine.

Benchmark 10-year notes US10YT=RR last fell 3/32 in price to yield 0.9664%, from 0.958% late on Monday.

The 30-year bond US30YT=RR last fell 2/32 in price to yield 1.7529%, from 1.751% late on Monday.

Oil prices extended Monday’s surge, which gave the commodity its biggest daily percentage gain in five months, as views of a possible medical solution to the pandemic outweighed sagging demand from new lockdowns to contain the virus.

U.S. crude CLcv1 rose 2.66% to settle at $41.36 per barrel, while Brent settled at $43.61 per barrel, up 2.85% on the day.

The dollar held its ground against a basket of currencies as the forex markets absorbed Monday’s big moves due to vaccine developments.

The dollar index fell 0.02%, with the euro up 0.07% to $1.1821.

The Japanese yen strengthened 0.08% versus the greenback at 105.30 per dollar, while Sterling was last trading at $1.3252, up 0.68% on the day.

Gold regained some ground lost in Monday’s plunge expectations of fiscal and monetary stimulus offered support to the safe-haven metal.

Spot gold added 0.8% to $1,876.91 an ounce.

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