NEW YORK, Nov 11 ― The S&P 500 posted a modest loss and the Nasdaq closed sharply lower yesterday as promising news regarding an effective Covid-19 vaccine led investors away from market leaders and toward cyclical stocks associated with economic recovery.

The blue-chip Dow, buoyed by industrial shares, gained ground and crude oil prices extended the previous session's surge as investors bet on a demand rebound.

Pfizer Inc announced on Monday that its Covid-19 vaccine candidate, developed with German partner BioNTech, showed in trials it had a 90 per cent success rate in preventing infection.

The development led to investors taking profits from market-leading tech stocks that have thrived amid the pandemic recession, a sell-off which pulled the tech-heavy Nasdaq deep into red territory.

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“Equity markets in the US have experienced the start of a significant rotation following the vaccine announcement,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “It's been a dramatic change and it's all in anticipation of returning to some form of economic normalcy once the vaccine has been distributed to the broad population.”

“The caveat is there's a second wave to the virus that's infecting a record number of people,” Ghriskey added. “But at least for now the markets are willing to look through that economic pain to better days ahead once the virus has been eradicated.”

Uncertainties from Washington still simmer in the background as President Donald Trump continued to press for investigations of election fraud following his defeat by Democrat challenger Joe Biden.

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“The circus going on in DC which is causing concern about a smooth transition of administrations in the months ahead,” Ghriskey said. “The flames coming out of Washington are unrelenting and constant.”

The Dow Jones Industrial Average rose 262.95 points, or 0.9 per cent, to 29,420.92, the S&P 500 lost 4.97 points, or 0.14 per cent, to 3,545.53 and the Nasdaq Composite dropped 159.93 points, or 1.37 per cent, to 11,553.86.

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 (M8.76 trillion) recovery package.

The pan-European STOXX 600 index rose 0.90 per cent and MSCI's gauge of stocks across the globe 0.02 per cent.

Emerging market stocks lost 1.16 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.69 per cent lower, while Japan's Nikkei rose 0.26 per cent.

US Treasury yields inched lower 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 last rose 1/32 in price to yield 0.9561 per cent, from 0.958 per cent late on Monday.

The 30-year bond last rose 7/32 in price to yield 1.7408 per cent, from 1.751 per cent 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.

US crude rose 2.66 per cent to settle at US$41.36 per barrel, while Brent settled at US$43.61 per barrel, up 2.85 per cent on the day.

The dollar held its ground against a basket of currencies and the yen hovered near three-week lows as the forex markets absorbed Monday's big moves due to vaccine developments.

The dollar index rose 0.08 per cent, with the euro down 0.05 per cent to US$1.1807.

The Japanese yen strengthened 0.08 per cent versus the greenback at 105.30 per dollar, while Sterling was last trading at US$1.3249, up 0.65 per cent 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 0.6 per cent to US$1,873.53 an ounce. ― Reuters