Wall Street slide in October; US election in focus
U.S. equities closed around breakeven on Monday, after gyrating between slight gains and losses as an investigation into new Hillary Clinton emails kept investors on edge.
The Dow Jones industrial average closed about 20 points lower, with Goldman Sachs contributing the most gains and Nike the most losses. The index also posted its narrowest single-day trading range since September 7 and the third-narrowest of 2016.
The S&P 500 fell less than a point, despite utilities rising about 2 percent. The Nasdaq composite closed just below breakeven.
Monday was also the last day of October, with the Dow and S&P extending their slide to three months, while the Nasdaq snapped a three-month winning streak.
“Punch drunk from the highly unanticipated Brexit outcome, institutional investors will take a wait and see approach until they have more clarity on how the balance of power in Washington will settle,” said Jeremy Klein, chief market strategist at FBN Securities.
FBI Director James Comey said in a Friday letter to lawmakers that the agency is probing new emails related to the Democratic nominee. The emails were discovered during a separate investigation involving former Congressman Anthony Weiner.
“The market has been pricing in a Hillary Clinton victory and that got thrown into disarray,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “I think everybody is going to be glued to the news with this Hillary Clinton email scandal. The S&P fell 20 points in a second” on Friday.
Clinton’s lead over her Republican counterpart, Donald Trump, has narrowed significantly since Friday’s news broke, according to data from RealClearPolitics.
“I think we’re entering a period of uncertainty,” said Peter Cardillo, chief market economist at First Standard Financial. “The prospects of a Clinton win leading to a Clinton resignation would be on the minds of people if she wins. A Trump win, on the other hand, can bring a whole new set of concerns. I think it’s a no-win situation in the short term.”
That said, Raymond James Chief Investment Strategist Jeffrey Saut said he still expects stocks to end the year at all-time highs. “Fundamentals have changed. GDP has come in better than expected and … earnings have improved,” he said. Saut added that stocks weren’t trading much more lower on Monday because Clinton is “still the odds-on-favorite” to win.
Bruce McCain, chief investment strategist Key Private Bank said “there are still some residual jitters, but I think that Hillary Clinton is still likely to win, with the House going to Republicans and the Senate to the Democrats, though I don’t think that’s fully priced in.”
The U.S. economy grew 2.9 percent in the third quarter, according to Commerce Department data released Friday.
U.S. stock futures rose slightly before the bell, as investors parsed through corporate earnings, a merger announcement between Baker Hughes and General Electric, and economic data.
“We think the energy market is becoming more attractive, and GE seems to think so as well,” said Chuck Self, CIO at iSectors. “If you see oil prices picking up again, then we think energy could become a pretty attractive trade.
U.S. crude fell 3.78 percent to settle at $46.86 per barrel as non-OPEC countries have yet to commit to any output limitations.
“The problem for OPEC is what number they should they use when they are talking about production freeze from other countries, should this be audited number or external third party number?” said Naeem Aslam, chief market analyst at Think Markets. “Now the traders will have to wait until their meeting and hope will be their only friend until then if they want to see supply cut.”
In economic news, consumer spending rose more than expected in September as households boosted purchases of motor vehicles and inflation increased steadily, which could bolster expectations of an interest rate hike from the Federal Reserve in December.
The Commerce Department said on Monday that consumer spending, which accounts for about 70 percent of U.S. economic activity, increased 0.5 percent after a downwardly revised 0.1 percent drop in August.
Other data released Monday included the Chicago PMI’s October read, which came in at 50.6, well below a September print of 54.2. The Dallas Fed manufacturing survey showed a print of 6.7 for October, below a 16.7 read in September.
The Fed is scheduled to hold a two-day meeting starting Tuesday, where it is largely expected to keep monetary policy unchanged.
U.S. Treasurys gained ground on Monday, with the two-year note yield falling to 0.85 percent and the benchmark 10-year yield holding around 1.83 percent. The U.S. dollar rose against a basket of currencies, with the euro near $1.098 and the yen around 104. The Mexican peso, considered a proxy trade for the U.S. election, rose against the greenback, last trading near 18.9.
The Dow Jones industrial average fell 18.77 points, or 0.1 percent, to close at 18,142.42, with Chevron leading advancers and Nike the top decliner.
The S&P 500 slipped less than a point to end at 2,126.15, with utilities leading six sectors higher and energy the biggest laggard.
The Nasdaq fell 0.96 points, or 0.02 percent, to close at 5,189.13.
Advancers and decliners were about even at the New York Stock Exchange, with an exchange volume of 1.035 billion and a composite volume of 3.842 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher, near 17.1.
Gold futures for December delivery fell $3.70 to settle at $1,273.10 per ounce.
Monday
Earnings: Anadarko Petroleum, Diamond Offshore, Tesoro, Tesoro Logistics, Embraer, Public Service, Check Point Software, CNA Financial, Southern Co, Williams Cos, Tenet Healthcare, NextEra Energy, General Growth Properties
Tuesday
Fed meeting begins
Earnings:BP PLC BP, Occidental Petroleum, Pfizer, Royal Dutch Shell, Archer Daniels Midland, Coach, Cummins, Discovery Comm. Kellogg,LyondellBasell Inds, Martin Marietta Materials, Molson Coors Brewing, Sony, Thomson Reuters, Noble Energy, Molson Coors, Electronic Arts, Pioneer Natural Resources, Western Union, Tableau Software, Western Union, Gilead Sciences, Etsy, Zillow, U.S. Steel, Newfield Exploration, Owens and Minor, Papa John’s, Square, Wingstop
Monthly vehicle sales
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM manufacturing
10:00 a.m. Construction spending
Wednesday
Earnings: Facebook, AIG, Qualcomm, MetLife, Allstate, Continental Resources, Avis Budget, 21st Century Fox, Allergan, Time Warner, Anthem, Clorox, Alibaba, Fitbit, Estee Lauder, Delphi Automotive, TransCanada, Zoetis, Yelp, NY Times, Och-Ziff Capial Management, Kate Spade, Whole Foods, TransOcean, Plains All American, Marathon Oil, First Solar, La Quinta, Red Robin Gourmet Burgers, LPL Financial
8:15 a.m. ADP employment
2:00 p.m. FOMC statement
Thursday
Earnings:Kraft Heinz Co Kraft Heinz, CBS, Starbucks, Las Vegas Sands, Activision Blizzard, Credit Suisse, Cigna, Encana, Adidas, AMC Networks, Church and Dwight, Chesapeake Energy, Fortress Investments, S&P Global, Scotts Miracle-Gro, Hyatt, Pinnacle West, Time Inc,G FireEye, GoPro, Fossil, Ambac, Twilio, Weight Watchers, Noodles and Co, Lions Gate, TrueCar, TiVo, Skyworks, El Pollo Loco
8:30 a.m. Initial claims
8:30 a.m. Productivity and costs
9:45 a.m. Services PMI
10:00 a.m. ISM nonmanufacturing
10:00 a.m. Factory orders
Friday
Earnings: Humana, Duke Energy, Madison Square Garden, Shutterstock, Centerpoint, AES, NRG Energy, Regeneron, Virtu Financial
8:30 a.m. Employment report
8:30 a.m. International trade
4:00 p.m. Fed Vice Chairman Stanley Fischer at IMF on policy changes after great recession
Source: CNBC
