Stocks traded lower on Monday as Wall Street's attention shifted to the looming presidential debate from central bank policy.
The S&P 500 was down 0.5%, the Dow Jones Industrial Average fell 0.65%, and the Nasdaq slid 0.7%.
The first presidential debate will likely add some volatility on Monday as traders worried over what regulations and economic policies the two candidates might push. Republican presidential candidate Donald Trump will join Democratic presidential candidate Hillary Clinton in Hampstead, N.Y., for the debate hosted by ABC's Lester Holt. The presidential debate is the first of three scheduled before voters head to the polls on Nov. 8.
"There are two political footballs to keep your eyes on: health care and energy," Stephen Guilfoyle, chief market economist at Stuart Frankel & Co., wrote in a note. "Depending on who appears to come out on top tonight could provide direction to these two sectors. Energy is a regulation play, while health care becomes about the perceived success or failure of Obamacare. These two candidates have very different ideas on these two areas, and an upper hand on Tuesday morning for either candidate could provide movement."
The health care sector was the worst performer on markets Monday. The industry's largest players including Johnson & Johnson (JNJ) , Merck (MRK) , Amgen (AMGN) , Gilead Sciences (GILD) and AbbVie (ABBV) were all lower, while the Health Care SPDR ETF (XLV) slid 1.1%.
Pfizer (PFE) fell 1.7% after opting against splitting into two publicly traded companies. The drugmaker said its best action was to manage its two units, Pfizer Innovative Health and Pfizer Essential Health, under the one Pfizer umbrella. The company said that splitting up "would not enhance the cashflow generation and competitive positioning of the businesses" and that the cost of separating would be "value destructive."
Mylan (MYL) fell nearly 1% on reports the drugmaker understated profits tied to its EpiPen when testifying before Congress. Mylan CEO Heather Bresch justified the price hikes last week following controversy that the list price had grown by more than 500% since 2007. Profits from the life-saving device are reportedly 60% higher than disclosed to Congress, according to The Wall Street Journal.
The S&P 500 ended Friday with weekly gains of more than 1% after the Federal Reserve opted to hit pause again on interest rates. Fed Chair Janet Yellen said the case for a rate hike had strengthened, but opted for caution before pulling the trigger. Markets are now pricing in a December rate hike.
Technical analyst Helene Meisler of Real Money, TheStreet's premium site for active traders, wrote in her latest analysis that "unless the S&P can get itself up and over 2200 soon, the moving average line will at best flatten out and at worst roll over." You can check out her thoughts here.
New home sales declined in August, though at a shallower pace than analysts anticipated. Sales of newly constructed homes fell by 7.6% to an annual pace of 609,000 last month, coming down from a blockbuster July increase. Sales increased 20.6% from a year earlier. Consensus was for 595,000. July's number was revised up to 659,000 from 654,000, putting the gains at their best since September 2007.
Crude oil prices moved higher ahead of the three-day International Energy Forum. Major oil producers, including energy ministers from Organization of Petroleum Exporting Countries will convene in Algeria from Monday to Wednesday to debate solutions to the current oil crisis. A production freeze, rather than an output cut, looks like the most likely solution for producers to agree on. An agreement has so far been out of grasp with producers wary to cede market control even as prices tanked.
"Market participants will be looking for clues on whether Saudi Arabia and Iran are likely to come to an agreement with each other and some non-OPEC producers about curbing crude oil supply," said Fawad Razaqzada, technical analyst at FOREX.com. "The outcome of these meetings could have significant consequences for oil prices, which in turn should have strong influence on the direction of energy stocks."
West Texas Intermediate crude oil gained 3.6% to $46.09 a barrel on Monday morning.
Deutsche Bank (DB) tumbled more than 5% on reports German Chancellor Angela Merkel wouldn't intervene in the bank's legal troubles with the U.S. Department of Justice. The Focus Magazine report also noted that Merkel would not offer state assistance to the bank. The U.S. Justice Department said earlier in the month that it may charge Deutsche Bank with a $14 billion fine for its alleged mortgage securities abuses.
Chemtura (CHMT) jumped 15% after synthetic rubber maker Lanxess (LNXSF) agreed to purchase the company in a deal worth $2.5 billion. Lanxess will acquire Chemtura for $33.50 a share in cash, which represents a premium of 18.9% to Chemtura's closing price on Sept. 23. Both boards have approved the deal, which should close by the middle of next year.
Carnival Cruises (CCL) fluctuated after a better-than-expected quarter. Third-quarter earnings of $1.92 a share beat by 3 cents. Revenue climbed nearly 5% to $5.1 billion. Analysts had expected sales of $4.7 billion.
Twitter (TWTR) was downgraded to underperform from perform at Oppenheimer. Analysts said the move was a valuation call as the stock is already valued at 20 times cash flow.
Disney (DIS) was downgraded to hold with a $102 price target at Drexel Hamilton. Estimates also were cut as secular trends will likely hurt subscriber numbers.