Benchmarks closed slightly in the red on Monday following a decline in oil prices and uncertainties regarding the outcome of presidential election. However, a better-than-expected consumer spending report indicated steady growth in the economy, which in turn had a positive impact on the markets. Moreover, investors digested General Electric-Baker Hughes merger news. Investors remained cautious on the last trading day of October ahead of monthly job report and Fed's policy meeting.
For the month, all the three key U.S. indexes finished in negative territory. The Dow and S&P 500 registered their third straight monthly declines and the Nasdaq ended in the red last month after gaining for three consecutive months. Also, the Dow posted its longest stretch of losses in six years, while the S&P 500 registered its worst monthly performance in last ten months.
For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) decreased 0.1%, to close at 18,142.42. The S&P 500 fell 0.26 points to close at 2,126.15. The tech-laden Nasdaq Composite Index closed at 5,189.14, losing 0.96 points. The fear-gauge CBOE Volatility Index (VIX) increased 2.3% to settle at 16.56. A total of around 6.8 billion shares were traded on Monday, higher than the last 20-session average of 6.4 billion shares. Advancers marginally outpaced declining stocks on the NYSE. For 49% stocks that advanced, 47% declined.
What Weighed On the Benchmarks?
Oil prices fell yesterday following doubts over a possible crude production cuts by major oil producing nations. During a meeting in Vienna, non-OPEC countries like Russia, Brazil, Mexico and others did not commit to freeze or cut their crude output until the OPEC members agree to do the same.
WTI and Brent crude fell 3.9% and 2.9% to $46.86 per barrel and $48.30 a barrel, respectively, reaching their worst settlement since September 27. Decrease in oil prices led the Energy Select Sector SPDR (XLE) to fall 1.1%, which emerged as the biggest decliner among the S&P 500 sectors. Dow component, Exxon Mobil Corporation ( XOM ) fell 1.7% and possess a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Moreover, news of the FBI probing Hillary Clinton's new emails, relating to FBI's investigation "of former Secretary Clinton's personal email server," also continued to weigh on investor sentiment. Also, investor remained cautious amid Fed's two-day policy meeting and Friday's jobs report.
Consumer Spending Remains Upbeat
In economic news, personal consumption expenditure rose 0.5% in September in contrast to a decrease of 0.1% in August, according to the Commerce Department. Consumer spending rose at its fastest level in last three months.
Merger On Focus
General Electric's shares fell ( GE ) 0.4% on news that the company entered into a deal to merge its oil and gas business with oil services major Baker Hughes ( BHI ). Shares of Baker Hughes declined 6.3%. (Read More: Merger Madness Continues with GE, Baker Hughes Oil Deal )
For the month, the Dow, S&P 500 and Nasdaq fell 0.9%, 1.9% and 2.3%, respectively. Weak Chinese trade data and disappointing September's jobs data weighed on the broader markets. Moreover, investors digested mixed bag of earnings results in October. Further, the Fed's Beige Book stated that the overall U.S. economy is expanding at a moderate pace, while a pick-up in inflation raised December rate hike chances.
Stocks That Made Headlines
Archer Daniels Midland Company ( ADM ) bounced back with an earnings beat in third-quarter, gaining from improved operating conditions in the quarter, which succeeded a challenging first-half 2016. ( Read More )
Shares of L Brands, Inc. ( LB ) declined roughly 6% during after the company provided soft comparable-store sales forecast for October and trimmed its third-quarter fiscal 2016 earnings projection. ( Read More )
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