NEW YORK (AP) — U.S. stocks are drifting Monday ahead of a momentous week full of potential flashpoints, while oil prices rose and Treasury yields fell.
The S&P 500 was edging down by 0.1% in late trading but remains near its record set last month. The Dow Jones Industrial Average was down 228 points, or 0.5%, with roughly an hour remaining in trading, and the Nasdaq composite was 0.1% lower.
Intel fell 2.6%, and chemical producer Dow sank 2.4% in their first trading since getting notified that they'll no longer be included in the Dow Jones Industrial Average. Warren Buffett's Berkshire Hathaway dropped 2.2% after reporting a drop in operating profit for the latest quarter.
But the majority of stocks within the S&P 500 rose, including a 2.3% gain for Fox after it reported a stronger profit than expected. That was despite increases in some costs, including for newsgathering at Fox News to cover this election cycle.
Election Day will arrive Tuesday, though its result may not be known for some time as officials count all the votes. That’s raised fears about the possibility of sharp swings around the world because markets infamously hate uncertainty.
History may be less foreboding. The broad U.S. stock market has historically gone on to rise regardless of which party wins the White House. And in 2020, U.S. stocks climbed immediately after Election Day and kept going even after former President Donald Trump refused to concede and challenged the results, creating plenty of uncertainty. A large part of that rally was due to excitement about the potential for a vaccine for COVID-19, which had just shut down the global economy.
“Bottom line – the US election is incredibly important, but the process is likely to be incredibly noisy,” according to Michael Zezas, a strategist at Morgan Stanley.
For markets, Zezas also points to how prices may have already moved ahead of expected outcomes from the election. A win for Trump this election could mean U.S. tariffs on Mexican imports, for example, which could hurt the value of the Mexican peso. But the peso has already fallen against the U.S. dollar in recent months, which could limit further moves if a Trump win were actually to happen.
A Trump victory would also be less of a surprise to markets this time around than in 2016, when Treasury yields soared amid expectations for tax cuts that could fuel a stronger U.S economy or further inflate the nation's debt. Treasury yields have already climbed in recent weeks, in part due to rising expectations in some market corners for a Trump win, along with a spate of reports showing the U.S. economy has remained stronger than feared.
On Monday, Treasury yields gave back a chunk of those gains. The yield on the 10-year Treasury fell to 4.31% from 4.38% late Friday.
Another investment that’s become a barometer in the market for Trump’s perceived chances of victory was swinging sharply. Trump Media & Technology Group veered between losses and gains through the morning before rising 8.1%.
The stock of the company behind Trump's Truth Social platform had been ripping higher from a bottom in September, until it hit a wall last week and dropped at least 11% in three straight days.
In the oil market, the price for a barrel of U.S. crude rose 2.8% to $71.03 after Saudi Arabia and other oil exporters said they would delay plans to increase the amount of crude they produced. Brent crude, the international standard, rose 2.7% to $75.08 for a barrel.
The price of Brent is still down for the year so far, in part because of worries about how much demand will come from China given its economic challenges.
The Standing Committee of China’s National People’s Congress is meeting this week, and analysts say the government may endorse major spending initiatives to boost economic growth amid troubles for the country's real-estate industry.
Beyond that meeting and Election Day in the United States, this week will also feature the latest meeting of the Federal Reserve, where the widespread expectation is for it to cut its main interest rate for a second straight time.
The Fed kicked off its rate-cutting campaign in September with a larger-than-usual cut of half a percentage point, as it widens its focus to include keeping the job market humming. It's a sharp turnaround after the Fed kept its main interest rate at a two-decade high in order to slow the economy enough to stamp out high inflation.
The hope that's propelled U.S. stock indexes to records recently is that the U.S. economy can manage to avoid a long-feared recession, in part because of the coming cuts to rates expected from the Fed.
On Wall Street, Nvidia rose 1.7%, and Sherwin-Williams jumped 4.1% after learning they'll be replacing Intel and the parent of the Dow chemical company in the Dow Jones Industrial Average.
Stocks fell in the nuclear power industry after U.S. regulators denied a request that would have sent more electricity to an Amazon data center from a Pennsylvania nuclear plant run by Talen Energy. Companies across the power industry have been making deals with data center operators to feed their growing need for more electricity, and Talen fell 2.5%.
In stock markets abroad, indexes were mostly lower after rising in much of Asia.
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AP Business Writer Elaine Kurtenbach contributed.
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