Following a robust showing last Friday, stocks lacked clear direction during Monday's trading session. The major indices fluctuated around the unchanged line before closing with losses.
The Dow Jones Industrial Average underperformed, dropping 257.59 points, or 0.6%, to settle at 41,794.60. Meanwhile, the Nasdaq Composite slid 59.93 points, or 0.3%, ending at 18,179.98, and the S&P 500 index fell 16.11 points, or 0.3%, to 5,712.69.
The volatile trading on Wall Street reflected traders' hesitation to make decisive moves ahead of Tuesday's U.S. elections, where Vice President Kamala Harris is contesting former President Donald Trump. With polls indicating a highly competitive race, the presidential election outcome may not be immediately clear on Election Day.
Attention is also directed towards the results of the House and Senate races, as they will significantly influence what the next president can achieve legislatively.
"As the election race is still too close to determine a winner, investors appear unwilling to adjust their portfolios significantly until results are confirmed," commented Dan Coatsworth, an investment analyst at AJ Bell. "Once we have clarity, the response could prompt sharp market movements as investors adjust post-election."
Traders are also anticipating the Federal Reserve's monetary policy decision scheduled for Thursday. The Fed is expected to implement a 25 basis point reduction in interest rates, but investors will scrutinize the accompanying statement for insights into the prospects of future rate cuts.
A notable downturn in the Dow was spurred by pressures on Intel (INTC) and Dow Inc. (DOW) following announcements that they would be removed from the blue-chip index. Conversely, Nvidia (NVDA) stocks climbed on news of its inclusion in the Dow, replacing Intel before trading begins on Friday. Sherwin-Williams (SHW) saw its shares rise, following the announcement that it would replace Dow Inc.
**Sector Dynamics**
In line with the overall market's tepid performance, most major sectors exhibited only minor changes. However, airline stocks experienced a significant decline, with the NYSE Arca Airline Index plunging by 2.5%.
Energy stocks bucked the trend, performing strongly as crude oil prices surged after OPEC+ delayed an increase in output. Reflecting this shift, the Philadelphia Oil Service Index escalated by 1.7%, and the NYSE Arca Oil Index advanced by 1.4%.
**International Markets**
In Asia-Pacific stock trading, markets largely advanced on Monday, though Japanese markets were closed for a holiday. China's Shanghai Composite Index increased by 1.2%, and Hong Kong's Hang Seng Index rose by 0.3%.
In Europe, the major markets displayed mixed results; the U.K.'s FTSE 100 Index edged up 0.1%, while France's CAC 40 and Germany's DAX indices declined by 0.5% and 0.6%, respectively.
**Bond Market**
Amid the uncertainty of the upcoming presidential election, the bond market saw a notable rise. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, decreased by 5.2 basis points to 4.309%.
**Looking Ahead**
Trading is expected to be relatively subdued on Tuesday due to Election Day, although economic reports on the U.S. trade deficit and service sector activity could still garner some attention.
