US stocks ended mixed on Tuesday as the approval of a $900bn rescue plan by Congress failed to lift the mood of investors.

Late on Monday, Congress passed the long-awaited fiscal stimulus that will bring money into the pockets of companies and people as they try to recover from the effects of the coronavirus pandemic.

But despite the nod from Washington, Wall Street stocks struggled to find direction. The benchmark S&P 500 ended the day down 0.7 per cent, with the tech-heavy Nasdaq Composite up 0.5 per cent.

“Markets are trying to balance short-term risk with the long-term outlook that coronavirus vaccines will be rolled out effectively into next year,” said Emmanuel Cao, head of European equity strategy at Barclays.

He added that investors had become fearful of selling out of a vaccine-led equities rally too early. “In this kind of environment, whenever the market has a pullback, people buy the dip. The direction of travel is still towards some return to normality as long as vaccine efficacy isn’t put into question by this new strain of the virus.”

European stocks recovered after declines in the previous session prompted by concerns over a more easily spreadable coronavirus strain that emerged in the UK.

The regional Stoxx 600 index rose 1.2 per cent, having fallen 2.3 per cent on Monday as dozens of countries closed their borders to UK travellers. Germany’s Xetra Dax added 1.3 per cent and the UK’s FTSE 100 rose 0.6 per cent.

Randeep Somel, portfolio manager at M&G, warned that market moves were often sharper in the days before Christmas than they usually would be, because of thin trading volumes.

“We’ve hit that period of time now where equities in general are very thinly traded so any issue is going to be magnified in any direction, and it will stay like this until probably the first full week of January,” he said.

The market mood also turned more bullish after the World Health Organization said on Monday evening that although the new variant of coronavirus was more infectious, it was likely that people could still be vaccinated against it.

The FTSE All World index had its worst day in three weeks on Monday, losing 0.8 per cent. The global benchmark was flat on Tuesday.

Japan’s Topix dropped 1.6 per cent on Tuesday while Australia’s S&P/ASX 200 lost 1.1 per cent and South Korea’s Kospi shed 1.6 per cent. In China, the CSI 300 index of Shanghai and Shenzhen-listed stocks moved down 1.6 per cent.

Trading in oil markets was negative again, a day after the biggest fall for Brent crude in more than a month. The international benchmark lost 1.8 per cent to $50 a barrel on Tuesday.