US benchmark equity indexes faced a decline on Monday as traders positioned themselves ahead of the presidential election and the Federal Reserve's upcoming monetary policy decision later in the week. The Dow Jones Industrial Average fell 0.6% to 41,794.6, while the S&P 500 and the Nasdaq Composite both dropped 0.3%, finishing at 5,712.7 and 18,180, respectively.
Among sectors, utilities experienced the most significant decrease, in contrast to the energy sector, which saw gains. The presidential election is set for Tuesday, featuring Democratic nominee and Vice President Kamala Harris competing against Republican nominee and former President Donald Trump. The Federal Open Market Committee of the central bank is scheduled to commence its two-day meeting on Wednesday.
Market analysts widely anticipate that policymakers will reduce the benchmark lending rate by 25 basis points on Thursday, as indicated by the CME FedWatch tool. "Given that the meeting will come on the heels of the election, there will likely be questions about its implications," Macquarie stated in a note to clients on Monday.
"Should Trump emerge as the victor, these would likely focus on the threatened tariffs, fiscal policy, and Fed independence." In bond markets, the US 10-year yield decreased by 7.6 basis points to 4.29%, and the two-year rate dropped by 3.5 basis points to 4.17%. In the realm of individual stocks, Constellation Energy ($CEG) saw its shares plunge nearly 13%, marking it as the worst performer on both the S&P 500 and Nasdaq.
This decline followed an adjustment by Mizuho, which lowered its price target from $264 to $235 while maintaining a neutral rating. Constellation Energy also released its third-quarter financial results and provided updates to its full-year earnings forecast on Monday. Intel ($INTC) registered the steepest drop on the Dow, down 2.9%, making it the second-largest decline on the Nasdaq.
On Friday, S&P Global’s division S&P Dow Jones Indices announced that Nvidia ($NVDA) will replace Intel in the Dow, effective November 8. On Monday, Nvidia shares closed 0.5% higher. Salesforce ($CRM) shares climbed 1.1%, the best performer on the Dow, following an adjustment in Evercore ISI's price target from $300 to $400. Freshpet ($FRPT) raised its full-year sales and core profit forecasts after reporting better-than-expected third-quarter earnings, driven by double-digit volume growth.
The company's shares surged by 13%. In commodity news, West Texas Intermediate crude oil rose by 3.2% to $71.68 a barrel. This increase followed the Organization of the Petroleum Exporting Countries and its allies' decision to postpone a planned hike in oil production by one month, as noted by D.A.
Davidson in a client note. Gold prices fell by 0.2%, closing at $2,745.20 per troy ounce, while silver decreased by 0.3% to $32.59 per ounce..