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U.S. stocks edged lower Monday, while the dollar slumped and Treasury yields tumbled, as investors braced for a wild week on Wall Street featuring the presidential election, a key Federal Reserve interest-rate decision and a host of corporate earnings.
Updated at 12:42 PM EDT
Bond watch
Benchmark 10-year Treasury notes yields are holding steady at 4.297%, following an overnight slump of around 10 basis points, as investors look to the $27 Treasury market and broader foreign exchange movements for clues on the election outcome and its impact of global asset prices.
"Markets are seemingly scaling back some Trump trades, and we suspect the next two days can see some abnormal swings in (the dollar) due to tighter volatility conditions ahead of a closely contested and highly binary US election," said ING analyst Francesco Pesole.
"As things stand now, we expect the dollar to sell off if Harris wins, while the impact of a Trump win may depend more on the Congress composition," he added.
The S&P 500 was marked 8 points lower, or 0.15%, in the opening minutes of trading, with the Nasdaq falling 83 points, or 0.46%.
The Dow was marked 78 points lower while the mid-cap Russell 2000 dipped 8 points, or 0.37%.
"The stock market appeared to get more cautious as October wore on, and the S&P 500 is coming off back-to-back down weeks for the first time since early August," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley .
"Normally, the Fed rate announcement would dominate the week’s discussion, but this isn’t just any week," he added. "Traders and investors who have been waiting for the outcome of the election have to prepare themselves for the possibility of a delayed outcome, and the potential impact of that uncertainty on the markets."
Updated at 9:17 AM EDT
Earnings ahead
The third quarter earnings season has proven to be better than Wall Street had forecast, with collective S&P 500 profits set to rise 8.4% from last year to a share-weighted $526.7 billion.
With around 349 companies reporting, 77.1% have topped forecast, just shy of the four quarter average of 79.1% but well ahead of the long-term average of around 66.9%.
Just over 100 companies are expected to report this week, including Palantir (PLTR) , Qualcomm (QCOM) , CVS Health (CVS) , Warner Bros Discover (WBD) and Paramount Global (PARA) .
Stock Market Today
Stocks ended higher on Friday, but closed out the week in the red, following a mixed slate of megacap tech earnings and a weaker-than-expected October jobs report that was heavily influenced by late-season hurricanes and a crippling strike at planemaker Boeing (BA) .
This week's focus, however, is expected to fall firmly onto Tuesday's national election — also including 34 Senate seats as well as the regular two-year turnover of the House of Representatives, which will have a crucial impact on any policies that either Vice President Kamala Harris or former President Donald Trump will attempt to bring to Congress.
Polls continue to suggest a dead heat between the two candidates, but a series of weekend surveys, including a surprise result from a respected pollster in Iowa, suggests some 11th-hour momentum for Harris.
That's adding to some reversal of last month's so-called Trump Trade, putting downward pressure on the dollar, which was marked 0.6% lower against a basket of its global peers, as well as Treasury bond yields, which pushed down 10-year notes 10 basis points to 4.297% in overnight trading.
Trump Media & Technology (DJT) shares, meanwhile, fell another 6% in heavy premarket volume, following on from last week's 27.5% slump, as traders pared bets on a victory for the former president. Trump Media is the parent of the Truth Social social-media platform.
Tuesday's presidential election will capture the attention of markets around the world, but a full result may not be available until later in the week.
VCG/Getty Images
Broader markets, however, look set for a cautious open ahead of tomorrow's election and a key Fed policy meeting, slated on Thursday, one day later than usual.
Last week's inflation and jobs data have had little impact on bets for a quarter-point rate cut this month, which would take the Federal Funds Rate to between 4.5% and 4.75%, with the odds of a follow-on reduction in December pegged at 82% according to CME Group's FedWatch.
On Wall Street, futures contracts tied to the S&P 500, which remains 20.1% higher for the year, are priced for a 10-point opening-bell gain while those linked to the Dow Jones Industrial Average suggest a 25-point bump.
The tech-focused Nasdaq, which is up 21.5% for the year, is priced for a modest 35-point gain.
Stocks on the move include Nvidia (NVDA) , which was marked 2.2% higher in the premarket following news late Friday that the AI-chip maker will replace Intel (INTC) in the Dow later this month.
In overseas markets, stocks were broadly higher modest gains in Europe, including a 0.3% gain for the Stoxx 600, and a 0.62% advance for the MSCI ex-Japan benchmark in Asia. Japan's Nikkei 225 remained closed for the country's annual Culture Day observance.
