Stocks ended near the previous session record high on Wednesday as Wall Street bumped up against disappointing job market data, while oil continued to rise and the dollar weakened further.
The US dollar has lost some of its safe-haven luster as traders turn to riskier assets, including some funded in other currencies, following positive news about Covid-19 vaccines and a seemingly normalizing US transition of power.
Former Fed Chair Janet Yellen's reported nomination to Treasury secretary has emboldened those risk bets and further weighed on the dollar.
"From here, the Fed will prove a mere auxiliary to maximize fiscal impact by ensuring cheap funding," said John Hardy, head of FX strategy at Saxo Bank.
"The long-term implications of the Yellen nomination are distinctly dollar negative."
The dollar index fell 0.147%, with the euro up 0.24% to $1.1916.
The Japanese yen was flat versus the greenback to 104.44 per dollar, while sterling was last trading at $1.3383, up 0.20% on the day.
On Wall Street, a surprise jump in weekly jobless claims added to signs the recovery in the labor market was stalling as the United States battled a new wave of Covid-19 infections.
MSCI's broadest gauge of world stocks was last flat after renewed demand for shares earlier pushed it to a record high of 622.12.
The rally in global stocks is set to continue for at least six months, a Reuters poll forecast on Wednesday.
But the Dow Jones Industrial Average fell 173.77 points, or 0.58%, to 29,872.47, the S&P 500 lost 5.76 points, or 0.16%, to 3,629.65 and the Nasdaq Composite added 57.08 points, or 0.47%, to 12,094.40.
"The question is, who wins the battle: the vaccines, or the rising cases in the short term?" said Christopher C. Grisanti, chief equity strategist at MAI Capital Management.
Daily US deaths from Covid-19 surpassed 2,000 for the first time since May, with hospitals in parts of the country already full.
A separate Reuters survey, meanwhile, found that optimism around vaccine developments and expectations of a recovery in corporate confidence and profitability should push European stocks to near record highs next year.
On Wednesday the pan-European STOXX 600 index lost 0.08% while Japan's Nikkei rose 0.50% after touching a 29-year high.
MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.57% lower, with Chinese shares capped by worries about rising debt defaults.
The job market data, an unexpected rise in applications for unemployment insurance, weighed on Treasury yields.
Benchmark 10-year notes last fell 1/32 in price to yield 0.8832%, from 0.882% late on Tuesday.
"I think a lot of people got ahead of themselves imagining that the recovery was taking shape. To me the recovery isn't taking shape until we have a viable vaccine," said Justin Lederer, Treasury analyst and trader at Cantor Fitzgerald.
Data showing a surprise drop in weekly US crude inventories extended a rally in oil prices driven by hopes that a Covid-19 vaccine will boost fuel demand.
"Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia," said UBS oil analyst Giovanni Staunovo.
"We maintain our bullish outlook for next year and target Brent to hit $60 per barrel at the end of 2021," he added.
U.S. financial markets will be closed on Thursday for the Thanksgiving holiday. U.S. bonds and stocks will trade on a partial schedule on Friday.