News: QAN GLOBAL MARKETS-The S&P 500 retreats, crude gains as vaccine hopes boost recovery bets

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(Updates to afternoon)

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 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%.

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 .DXY fell 0.02%, with the euro EUR= up 0.07% to $1.1821.

The Japanese yen strengthened 0.08% versus the greenback at 105.30 per dollar, while Sterling GBP= 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 XAU= added 0.8% to $1,876.91 an ounce.

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