Stocks pared gains on concern that lawmakers will pass a smaller stimulus package after encouraging developments on the coronavirus vaccine front.

The S&P 500 moved away from record levels after Senate Majority Leader Mitch McConnell said Congress should pass only a limited bill before the end of 2020. Meanwhile, the Federal Reserve warned that asset prices in key markets could take a hit if the pandemic’s economic impact worsens in coming months. The benchmark gauge still closed at a two-month high amid strong trading volume on news the COVID-19 shot being developed by Pfizer Inc. and BioNTech SE prevented over 90 per cent of infections. The Nasdaq 100 fell amid a selloff in giants such as Amazon.com Inc. and Netflix Inc. Highlighting the rotation from big tech, an equal-weight measure of the S&P 500 had its best day ever relative to the cap-weighted index.

Meanwhile, several block sales in 10-year Treasury futures added fuel to the pressure on notes, with the benchmark rate soaring to the highest since March. A measure of credit-market risk eased to pre-pandemic levels, and junk-rated companies hit the market in droves to take advantage of a plunge in borrowing costs. Oil surged, while gold, the Japanese yen and the Swiss franc slumped. The dollar rose.

Investors pulled out of haven assets and poured cash into markets that are closely tied to economic growth, with the value of the MSCI All Country Index jumping by as much as US$1.8 trillion after the latest vaccine developments. President-elect Biden announced a new coronavirus task force as his transition team seeks to fulfill a campaign promise to develop a dramatically different approach than President Trump’s to contain the outbreak. He warned of a “dark winter” and many more deaths as the pandemic continues to spread unabated. The top infectious disease expert in the U.S. Anthony Fauci said the shot being developed by Pfizer will have a “major impact” on everything we do with regards to COVID-19 going forward.

“The bull market has a ton of ammunition to keep going,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “With more certainty around the election, a strong quarter of earnings across many sectors, and extremely positive news on the vaccine front, there is little to hold us back.”

Elsewhere, the Australian dollar-yen cross -- a commonly watched risk barometer -- surged by most since June. The Turkish lira soared after the resignation of the country’s economy czar and the dismissal of the central bank chief.

These are some key events coming up:

• Alibaba holds its annual Singles’ Day on Wednesday, an online global shopping phenomenon that had US$38 billion of sales last year
• European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Federal Reserve Chair Jerome Powell are among the speakers Thursday at an online ECB Forum entitled “Central Banks in a Shifting World”
• Finance ministers and central bankers from the Group of 20 hold an extraordinary meeting Friday to discuss bolder action to help poor nations struggling to repay their debts.

These are some of the main moves in markets:

Stocks

• The S&P 500 increased 1.2 per cent as of 4 p.m. New York time.
• The Stoxx Europe 600 Index jumped 4 per cent.
• The MSCI Asia Pacific Index climbed 0.4 per cent.
• The MSCI Emerging Market Index gained 1.2 per cent.

Currencies

• The Bloomberg Dollar Spot Index increased 0.4 per cent.
• The euro declined 0.5 per cent to US$1.182.
• The Japanese yen depreciated 1.9 per cent to 105.35 per dollar.

Bonds

• The yield on 10-year Treasuries jumped 11 basis points to 0.92 per cent.
• Germany’s 10-year yield climbed 11 basis points to -0.51 per cent.
• Britain’s 10-year yield jumped 10 basis points to 0.372 per cent.

Commodities

• The Bloomberg Commodity Index dipped 0.1 per cent.
• West Texas Intermediate crude surged 7.6 per cent to US$39.98 a barrel.
• Gold depreciated 4.4 per cent to US$1,865.67 an ounce.

--With assistance from Joanna Ossinger, Andreea Papuc, Adam Haigh, Anchalee Worrachate, Lynn Thomasson, Cecile Gutscher, Claire Ballentine, Nancy Moran, Sophie Caronello, Katherine Greifeld and Jan-Patrick Barnert.