Wall Street drifts ahead of election day and a manic week for markets

NEW YORK —  U.S. stocks drifted lower Monday ahead of a momentous week full of potential flashpoints in Washington, D.C., and around the world.
The Standard & Poor’s 500 index slipped 0.3%, though it remains near its record set last month. The Dow Jones industrial average fell 0.6%, while the Nasdaq composite dropped 0.3%.
Intel fell 2.9%, and chemical producer Dow sank 2.1% in their first trading since getting notified that they’ll no longer be included in the Dow. Warren Buffett’s Berkshire Hathaway fell 2.2% and was one of the heaviest weights on the market after reporting a drop in operating profit for the latest quarter.
But the majority of stocks within the S&P 500 rose, including a 2.8% 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 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 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,” said Michael Zezas, a strategist at Morgan Stanley.
For markets, Zezas also points to how prices may have 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 fallen against the U.S. dollar in recent months, which could limit further moves if a Trump win were to happen.
A Trump victory would be less of a surprise to markets this time around than in 2016, when Treasury yields soared on expectations for tax cuts that could further inflate the nation’s debt or fuel a stronger U.S. economy. Treasury yields have climbed in recent weeks, in part due to rising expectations in some market corners of a Trump win, along with a spate of data 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 4.29% from 4.38% late Friday.
Another investment that’s become a barometer in the market for Trump’s perceived chances of victory swung sharply through the day. After veering between losses and gains through the morning, Trump Media & Technology Group ended up rising 12.4%.
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 producers said they would delay plans to increase the amount of crude they produced. Brent crude, the international standard, rose 2.7% to $75.08 a barrel.
The price of Brent is still down for the year, 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 also will feature the latest meeting of the Federal Reserve, and the widespread expectation is for it to cut its main interest rate for a second straight time.
The hope that’s propelled U.S. stock indexes to records recently is that the U.S. economy can remain resilient and avoid a long-feared recession, in part because of the coming cuts to rates expected from the Fed.
On Wall Street, Nvidia rose 0.5%, and Sherwin-Williams jumped 4.6% after learning that they’ll be replacing Intel and the parent of the Dow chemical company in the Dow.
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 2.2%.
All told, the S&P 500 fell 16.11 points to 5,712.69. The Dow dropped 257.59 points to 41,794.60, and the Nasdaq composite lost 59.93 points to 18,179.98.
In stock markets abroad, indexes were mostly lower in Europe after rising in much of Asia.
Choe writes for the Associated Press. AP writer Elaine Kurtenbach contributed to this report.