Stocks Bide Time Despite Oil's Slide

Updated from 4:02 p.m. EST

Stocks closed modestly higher Monday as election uncertainty mostly offset the optimism created by slumping oil and Oracle's (ORCL Quote) sweetened bid for PeopleSoft (PSFT Quote).

The Dow added 26.90 points, or 0.27%, to 10,054.40; the S&P 500 rose 0.31 points, or 0.03%, at 1130.51; and the Nasdaq rose 4.88 points, or 0.25%, to 1979.87, a new four-month closing high. The 10-year Treasury bond fell 16/32 to yield 4.09%, while the dollar was higher against the yen and the euro.

Volume was light on the New York Stock Exchange, where 1.3 billion shares traded and advancers beat decliners by a margin of 3 to 2. At the Nasdaq, 1.5 billion shares changed hands, with advancers even with decliners.

"For the most part, people are sitting up on the sidelines waiting to close out this presidential election -- hopefully with a clear winner," said Robert Pavlik, portfolio manager at Oaktree Asset Management.

"There are lot of opportunities left in stocks, and although certain sectors may do better or worse depending on who wins the election," Pavlik said. "In the long run, stocks will continue to go up."

Oil futures fell sharply, with December crude ending down $1.63 a barrel to a one-month low of $50.13. The contract is now down more than 10% since last Wednesday.

"The improvement that we've been seeing in the markets over last week and today suggests to us that you're probably setting yourself up for a good year-end rally," said John Hughes, managing director at Epiphany Equity Research.

What the market doesn't want is a disputed result in Tuesday's election.

"If we don't have finality, then the market is going to drift lower," said Al Goldman, chief market strategist at A.G. Edwards.

A variety of polls show little or no election impact from Friday's Osama bin Laden videotape, in which the al-Qaeda leader is purported to be shown saying neither presidential candidate would spare the U.S. from more terrorism. A survey carried out between Friday and Sunday by The Wall Street Journal and NBC put nationwide support for President Bush at 48% and Sen. John Kerry at 47%.