The S&P 500 fell slightly in volatile trading on Monday to start the holiday week as enthusiasm over a coronavirus stimulus deal was overwhelmed by worries over a viral new Covid strain in the U.K.

The broad equity index dipped 0.4%, or 14.49 points, to 3,694.92 after falling nearly 2% at its session low. The Nasdaq Composite fell 0.1%, or 13.12 points, to 12,742.52. The Dow Jones Industrial Average erased a 400-point loss to eke out a small gain as strength in Nike and bank shares supported the blue-chip benchmark. The 30-stock Dow rose 0.1%, or 37.40 points, to 30,216.45.

Nike popped nearly 5% to hit a record high on the back of strong earnings. Bank stocks jumped in unison with JPMorgan and Goldman up 3.8% and 6.1%, respectively, after the Federal Reserve announced it will allow the industry to resume share buybacks in the first quarter of 2021.

Travel-related stocks initially fell sharply on news of an infectious new coronavirus strain in the U.K., which triggered more severe lockdowns and travel restrictions across Europe. However, some believe the concerns over the new virus variant could be overblown.

The U.K. strain "doesn't seem to have mutated the surface proteins of the virus in a way that they would slip past our vaccines or prior immunity. In fact, we don't think that that's the case," Dr. Scott Gottlieb told CNBC's "Squawk Box." "But what this does suggest is that eventually this vaccine probably will evolve its surface proteins in a way that they won't be recognized by the antibodies we have right now, and we will have to update our vaccines."

Gottlieb said the Covid virus did not seem to be mutating its proteins as rapidly as the seasonal flu and estimated that vaccines would need to be updated about every three years. 

Eli Lilly said Monday that its Covid antibody therapy "should maintain full activity against the new strain" identified in the U.K.

Shares of airlines and cruise line operators closed well off their session lows. Norwegian finished the day 1.6% lower and Royal Caribbean dipped 0.7%. American Airlines fell 2.5% after sliding more than 5% earlier, while United Airlines dipped 1.5%. More than two-dozen countries from Italy to India to El Salvador have banned flights from the U.K. or travelers who have been in the country.

Tesla dropped more than 6% as it entered the S&P 500 with a 1.69% weighting in the index, the fifth largest. The stock fell to its session following a report that Apple is moving forward with its plan to produce electric vehicles.

Monday's choppy trading came as lawmakers reached an agreement on a $900 billion relief package, which would provide direct payments and jobless aid to struggling Americans. The announcement came after negotiators resolved a key sticking point by rolling back the Federal Reserve's emergency lending powers.

Treasury Secretary Steven Mnuchin told CNBC's "Squawk Box" that the stimulus money will go out as soon as next week. Lawmakers will vote on the relief and funding bill on Monday.

Now with a stimulus package agreed upon, investors may also be seeking to lock in profits after an unexpected banner year. With less than two trading weeks left in 2020, the S&P 500 is up 14.4% for the year, while the 30-stock Dow has risen 5.9%. The Nasdaq Composite has rallied 42.0% this year as investors favored high-growth technology companies.

The major averages hit record highs recently amid optimism toward fresh coronavirus stimulus as well as the vaccine rollout. Moderna is shipping its first batch of vaccine doses after receiving approval for emergency use from the U.S. Food and Drug Administration. Meanwhile, the vaccine by Pfizer and BioNTech is being distributed to front-line health-care workers around the country.

"Covid mutations are a reality, and there is at least some disappointment around what's actually in the stimulus deal, which means we may see this translate into volatility as we narrow in on the end of 2020," said Chris Larkin, managing director of trading and investing product at E-Trade.

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