U.S. stocks fell for a third day as optimism over a COVID-19 relief bill was tempered by the emergence of a new variant of the virus and a slew of lockdowns and travel curbs to contain it. The dollar advanced and Treasuries gained.

The benchmark S&P 500 fluctuated between gains and losses before closing lower, with consumer services and energy the biggest sector decliners. The Nasdaq Composite and Russell 2000 set record highs in what is a holiday shortened week. U.S. lawmakers cleared a US$2.3 trillion year-end spending bill and stimulus package. President-elect Joe Biden warned the “darkest days” of the pandemic were still to come and called on Congress to be ready early next year to produce another stimulus package.

“Sometimes you get exaggerated moves in stocks due to lack of liquidity,” said Jonathan Boyar, managing director at BoyarValue Group.

Amgen Inc. was among the biggest losers in the Dow Jones Industrial Average, falling after a study showed an experimental drug failed to cut asthma patients’ dependence on steroids. Apple Inc. paced the gain in the Nasdaq after a report said the company is planning to make a battery-powered self-driving car as soon as 2024. Tesla Inc. fell for a second day.

In Europe, stocks rebounded from their steepest slump in almost two months Monday, with all industry groups in the green. British Airways owner IAG SA surged more than 5 per cent as travel shares bounced back. Crude oil edged lower for a second day.

The global stock rally is looking increasingly fragile after equities touched a record high last week, as lockdowns and rising virus cases threaten to overshadow U.S. pandemic relief and the initial rollout of vaccines. The bill passed by Congress on Monday represents the second-biggest economic rescue package in American history.

“The agreed fiscal relief package will undoubtedly help mitigate some of the negatives but unfortunately, it won’t be able to fully offset the effects of people staying at home as many businesses face tighter restrictions or are even forced to close,” according to James Knightley, chief international economist at ING Groep.

In the U.K., where the virus variant has taken hold, a full lockdown came into force in London and southeast England. Europe and regions from Canada to Hong Kong have suspended travel links to the island nation, piling pressure onto the government as it tries to salvage a free-trade agreement with the European Union.

The bloc rebuffed Prime Minister Boris Johnson’s latest concessions on fishing rights, keeping the pound lower.

Here are some key events coming up:

• EIA crude oil inventory report is due Wednesday.
• U.S. jobless claims, durables, personal income data comes Wednesday.
• U.S. bond and stock trading and markets in other parts of the world will shut early on Thursday for the Christmas holidays. Most global markets are shut Friday.

These are the main moves in markets:

Stocks

• The S&P 500 Index decreased 0.2 per cent to 3,687.27 as of 4:02 p.m. New York time, the lowest in more than a week.
• The Dow Jones Industrial Average sank 0.7 per cent to 30,015.51, the lowest in more than a week on the biggest dip in more than three weeks.
• The Nasdaq Composite Index increased 0.5 per cent to 12,807.92, the highest on record.
• The Stoxx Europe 600 Index surged 1.2 per cent to 391.25, the biggest jump in five weeks.

Currencies

• The Bloomberg Dollar Spot Index jumped 0.6 per cent to 1,132.18, the highest in more than a week on the largest climb in almost eight weeks.
• The euro sank 0.7 per cent to US$1.2162, the weakest in a week on the biggest dip in more than four months.
• The British pound fell 0.7 per cent to US$1.3368, the weakest in more than a week on the largest drop in more than a week.
• The Japanese yen depreciated 0.3 per cent to 103.66 per dollar, the weakest in a week on the biggest dip in more than two weeks.

Bonds

• The yield on 10-year Treasuries declined two basis points to 0.92 per cent, the largest drop in more than a week.
• Germany’s 10-year yield declined two basis points to -0.60 per cent, the lowest in a week on the biggest fall in more than a week.
• Britain’s 10-year yield declined two basis points to 0.183 per cent, the lowest in more than a week.

Commodities

• West Texas Intermediate crude dipped 2.1 per cent to US$46.94 a barrel, the lowest in more than a week.
• Gold depreciated 0.9 per cent to US$1,860.77 an ounce, the weakest in a week on the largest dip in almost two weeks.