US benchmark equity indexes experienced declines on Monday as the presidential election approaches and the Federal Reserve's monetary policy decision looms later this week. The Dow Jones Industrial Average decreased by 0.6%, ending at 41,794.6, while the S&P 500 and the Nasdaq Composite fell by 0.3% each, closing at 5,712.7 and 18,180 respectively.
Among sectors, utilities witnessed the largest declines, whereas energy stocks led the gainers. The US presidential election is scheduled for Tuesday, featuring Democratic nominee and current US Vice President Kamala Harris facing off against Republican nominee and former US President Donald Trump. The Federal Open Market Committee of the central bank is set to start a two-day meeting on Wednesday.
Forecasts indicate that policymakers are likely to reduce the benchmark lending rate by 25 basis points on Thursday, as suggested 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," noted Macquarie in a Monday client update.
"Should Trump emerge as the victor, these would likely focus on threatened tariffs, fiscal policy, and the independence of the Fed." The US 10-year yield saw a decrease of 6.4 basis points, settling at 4.3%, while the two-year rate declined by 3.1 basis points to 4.17%. In company updates, Constellation Energy ($CEG) shares plummeted nearly 13%, marking the worst performance on the S&P 500 and Nasdaq.
Mizuho revised its price target for the stock down to $235 from $264, maintaining a neutral rating. Constellation Energy released its third-quarter financial results and adjusted its full-year earnings outlook on Monday. Intel ($INTC) faced the most significant drop on the Dow and second-largest on the Nasdaq, declining by 2.9%.
Notably, S&P Global's S&P Dow Jones Indices announced on Friday that Nvidia ($NVDA) will replace Intel on the Dow, effective November 8, with Nvidia shares incrementing by 0.5% on Monday. Salesforce ($CRM) shares climbed by 1%, securing the best performance on the Dow, as Evercore ISI raised its price target on the stock from $300 to $400. Freshpet ($FRPT) raised its full-year sales and profit forecasts following a surge in third-quarter earnings, driven by double-digit volume growth, resulting in a 13% jump in the company’s shares. In commodities, West Texas Intermediate crude oil experienced a 3.2% increase, reaching $71.68 per barrel.
This rise followed the decision by the Organization of the Petroleum Exporting Countries and its allies to postpone a planned hike in oil production by a month, according to D.A. Davidson in a client note. Gold prices fell by 0.1% to $2,746.70 per troy ounce, while silver dipped by 0.2% to $32.63 per ounce..