Stocks Remain in Flux
Updated from 12:18 p.m. EST
A day before the presidential election, stocks on Wall Street were experiencing mixed trading Monday, as traders prepared for another week of
. Some bearish economic data releases were also tempering investor enthusiasm.
The
Dow Jones Industrial Average
was lately gaining 10 points at 9334, and the
S&P 500
was lower by 1.4 points at 967. The
Nasdaq
gained 10 points to 1731.
The election is potentially significant in that there's a chance that Democrats will control the House, the Senate and the presidency, said Alan Gayle, senior investment strategist at RidgeWorth Capital Management. "The market would be very happy if we had gridlock, because that would reduce the chances that there would be significant rule changes," said Gayle.
However, said Gayle, "I think to a certain extent the pervasiveness of the financial crisis has probably had a more dominant impact on investing leading up to the election and will continue over the near term." He said that performance by health-care stocks, which would typically decline in anticipation of Democratic rule, have lately held up relative to the major averages because they are defensive against a downturn.
Financial-sector turmoil continued to hold investors' attention.
The Wall Street Journal
reported that as many as 1,800 public companies could be signing up for investments by the
under the
.
Meanwhile, leveraged-buyout firm
was delaying plans to come public as the credit crisis hurt its capitalization standing. KKR said in a statement it would hold off on buying Amsterdam-listed
KKR Private Equity
until next year.
Insurance company
Hartford Services Group
(HIG) - Get Report
said in a filing with the
Securities Exchange Commission
that it had more than enough capital to keep its double-A credit rating at year-end.
Moody's Investors Service on Monday downgraded Hartford's senior unsecured debt rating and its short-term debt rating. Moody's said that Hartford's third-quarter earnings, along with weakness in debt and equity markets, were cause for concern.
Agricultural products maker
Monsanto
(MON)
announced its intent to buy Brazilian firm
Aly Participacoes
for $290 million.
Less fortunate among agricultural names was
( VSE), which said late Friday it was filing for Chapter 11 bankruptcy protection.
In other merger news,
The Detroit News
reported that
Cerberus Capital
, which owns
, has ceased discussions with
Nissan-Renault
because Cerberus intends on merging with
General Motors
(GM) - Get Report
.
Ford
(F) - Get Report
announced that its October sales declined 30 percent from a year ago.
Toyota
(TM) - Get Report
experienced a sales decline of 23% for the month.
Electronics retailer
(CC) - Get Report
announced that it would close 155 of its U.S. stores and cut down on its planned openings as it considers its options regarding a restructuring.
Soft-drink maker
(PEP) - Get Report
announced it would invest $1 billion in China over the next four years in an effort to gain a foothold in emerging markets.
Airplane manufacturer
(BA) - Get Report
announced that a strike by the International Association of Machinists had ended after the company and union signed a four-year contract.
As for earnings, insurer
PMI Group
( PMI) reported a wider third-quarter loss, and
Goodyear Tire
(GT) - Get Report
announced a decline in quarterly profit.
In terms of economic data, the Census Bureau reported that construction spending for September declined 0.3%. Economists were expecting spending to decrease by 0.8%.
The Institute for Supply Management's October manufacturing index showed a reading of 38.9, down from 43.5 in September and below economists' forecast of 42.
Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in an email that the ISM index's decline marks its lowest reading since September 1982, and that its decline reflects that orders, production and employment have dropped sharply to deep recession levels. "The key issue now is just how much of
this plunge in activity reflects the shock of the market meltdown and how much will be sustained. We think there will be a modest bounce next month but the trend is horrific," he wrote.
"Clearly, the reading at 38.9 is very weak," said Gayle of RidgeWorth. He also said that there is a mitigating factor in the bearish data in that overall inventories are not excessive. Whereas in the past, businesses might have been slower to respond to declines in consumer spending, manufacturers have been quicker to respond to the negative environment, he said. "I don't think that number carries the implication of protracted weakness that it has in previous decades or previous cycles."
The European Commission also reported that Europe is probably in a recession and will continue to struggle through the next year.
Shifting to commodities, crude oil was losing $3.36 to $64.45 a barrel. Gold was climbing $11 to $729.20 an ounce.
Longer-dated U.S. Treasury securities were mixed. The 10-year was up 11/32, yielding 3.92%. The 30-year was dropping 2/32 to yield 4.33%. The dollar was gaining on the yen, euro and pound.
Credit markets were loosening. Three-month dollar Libor, a measure of the rate banks charge one another for large loans, was down 17 basis points to 2.86%. Overnight Libor slipped 2 basis points to 0.39%.
Abroad, European exchanges were edging higher, as the FTSE in London and the Dax were logging gains. In
, Japan's Nikkei was closed for a holiday, while Hong Kong's Hang Seng finished on the upside.
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