Stocks
continue to turn in a lackluster performance in mid-day trading on
Monday, with traders reluctant to make any significant moves ahead of
tomorrow's elections. The choppy trading comes after the markets ended
last week's trading roughly flat.
The major averages are currently turning in a mixed performance, although they are all nearly unchanged. While the Nasdaq is up 5.34 points or 0.2 percent at 2,987.47, the Dow is down 13.98 points or 0.1 percent at 13,079.18 and the S&P 500 is down 1.66 points or 0.1 percent at 1,412.54.
Many
traders seem to be staying on the sidelines amid uncertainty about the
outcome of Tuesday's presidential race between President Barack Obama
and Republican challenger Mitt Romney.
In
the short-term, investors will be looking for a definitive outcome from
the election, as a race that is still too close to call or requires a
recount will add to insecurity on Wall Street.
Looking
further ahead, a win for Obama is expected to be good news for the
alternative energy, telecom, and housing sectors, while a win for Romney
could benefit the defense, resource, and financial sectors.
Along
with the outcome of the presidential race, traders are also likely to
keep an eye on which party controls the House and the Senate following
the elections.
On the economic front, the Institute for Supply Management released a report showing a modest slowdown in the pace of growth by the U.S. service sector.
The ISM
said its non-manufacturing index dipped to 54.2 in October from 55.1 in
September, although a reading above 50 indicates continued growth in
the service sector. Economists had expected the index to edge down to a
reading of 54.9.
Peter Boockvar, managing director at Miller Tabak, said, "For reasons we all know, American business is
dealing with a lack of visibility on a variety of issues both here and
abroad, one of which of course will be resolved tomorrow."
"From
a market perspective, the emotional response from the election results
will be the main driver into year end, with the practical results being
dealt with in 2013," he added.
Among individual stocks, KBW, Inc. (KBW) is posting a notable gain after the financial services provider agreed to be acquired by Stifel Financial (SF) in a transaction valued in excess of $575 million. KBW is currently up by 7 percent.
Auto giant Toyota
(TM) is also moving to the upside after reporting a quarterly profit
that rose sharply year-over-year and raising its profit forecast for the
full year.
Meanwhile, shares of Time Warner Cable
(TWC) have come under pressure after the cable-television operator
reported weaker than expected third quarter earnings amid the loss of
video customers. Time Warner Cable is currently down by 6.7 percent.
Sector News
While many of the major sectors continue to show only modest moves, considerable strength has emerged among biotechnology stocks. The NYSE Arca Biotechnology Index has surged up by 2.6 percent, climbing further off last Wednesday's four-month closing low.
InterMune (ITMN) and Sequenom (SQNM) are turning in two of the biotech sector's best performances, jumping 10.7 percent and 5.8 percent, respectively.
Oil service stock are also seeing considerable strength, driving the Philadelphia Oil Service Index up by 1.4 percent. Transocean
(RIG) has helped to lead the sector higher, advancing by 5 percent
after reporting better than expected adjusted third quarter earnings.
Electronic storage and networking stocks are also posting notable gains, helping to keep the tech-heavy Nasdaq in positive territory.
On the other hand, utilities stocks have come under significant selling pressure, dragging the Dow Jones Utilities Average down by 1.5 percent. With the loss, the average has fallen to a four-month low.
Southern Co. (SO) has helped to lead the utilities sector lower, sliding 2.5 percent after reporting disappointing third quarter results.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day down by 0.5 percent, while China's Shanghai Composite Index edged down by 0.1 percent.
The major European markets also moved to the downside on the day. While the French CAC 40 Index tumbled by 1.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index both fell by 0.5 percent.
In
the bond market, treasuries have moved higher amid the uncertainty
about the election results. As a result, the yield on the benchmark
ten-year note, which moves opposite of its price, is down by 4.5 basis
points at 1.681 percent.
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