U.S. equities fluctuated between positive and negative territory on Monday, as market participants geared up for a pivotal week featuring the American presidential election and the Federal Reserve’s policy statement disclosure.
In the presidential race, candidates Donald Trump and Kamala Harris were both vying for an advantage on the final full day of a contest that polls indicate is extremely competitive. Determining the winner could take several days.
Some of the so-called “Trump trades” reversed course after a recent survey indicated Harris had a lead in Iowa, leading to declines in the U.S. dollar, Treasury yields, and bitcoin. Trump Media & Technology Group saw an increase of 13.9%, recovering from earlier losses of almost 6%.
Following the Iowa poll, Harris’ odds improved on numerous betting platforms, which many investors view as barometers for the election outcome.
“With the determination of the winner likely stretching until Thursday or so, this week is going to be quite volatile,” stated Sam Stovall, chief investment strategist at CFRA Research in New York.
“Earnings reports are positive, the Fed is expected to lower interest rates, and the main uncertainty lies with the election; let’s hope this gets resolved quickly so investors can return to their strategies.”
The Dow Jones Industrial Average dipped 216.69 points, or 0.52%, to 41,835.50, the S&P 500 decreased by 4.00 points, or 0.07%, to 5,724.80, while the Nasdaq Composite rose by 8.94 points, or 0.05%, to 18,248.85.
The benchmark 10-year Treasury note last traded down roughly 4 basis points (bps) to 4.325%, having initially fallen by as much as 10 bps. Fluctuating trading patterns are anticipated until the election outcome is confirmed, allowing for greater clarity on government policies. The 10-year yield had experienced five consecutive months of decline before rising over 47 bps in October.
The Russell 2000 increased by 0.73%, benefiting from lower yields, which are expected to favor small-cap stocks.
The CBOE’s Volatility Index, often referred to as Wall Street’s “Fear Gauge,” stood at 22.17, surpassing its historical average of 19.46.
Market participants were largely anticipating a 25 bps interest rate cut from the Fed at its policy announcement on Thursday, with CME’s FedWatch Tool indicating a 98% probability of a decrease, and just a 2% chance that the central bank will maintain current rates.
The energy sector was the biggest gainer among the 11 primary S&P sectors, increasing by 1.72% as oil prices rose following OPEC+’s decision to postpone plans for an output boost.
Chip giant Nvidia climbed 2.13%. On Friday, S&P Dow Jones Indices announced that the company would replace Intel in the Dow Jones Industrial Average. Intel shares fell 2.28%, which negatively impacted the Dow.
Hotel chain Marriott International dropped 2.09% after revising its 2024 profit outlook downward due to weak travel demand in the U.S. and China.
Constellation Energy was the worst performer within the S&P 500, plummeting 10.79% after the Federal Energy Regulatory Commission rejected an agreement to boost the power capacity of an Amazon data center linked directly to Talen Energy’s nuclear facility in Pennsylvania. This decision negatively impacted the utilities sector <.SPLRCU>, which fell by 1.25%.
On the NYSE, advancing issues outnumbered decliners by a ratio of 1.76-to-1, while on the Nasdaq, the ratio was 1.27-to-1.
The S&P 500 recorded 10 new 52-week highs and four new lows, whereas the Nasdaq Composite noted 58 new highs and 108 new lows.
