Market Update

Investing.com— The S&P 500 closed lower on Monday as traders adopted a cautious stance ahead of the presidential election and the Federal Reserve's rate decision later this week.

At 4:00 p.m. ET (2100 GMT), the Dow Jones Industrial Average dropped 257 points, or 0.6%, the S&P 500 index slipped 0.3%, and NASDAQ Composite fell 0.3%.

Trump, Harris Set for Tight Presidential Race

Investors remained uneasy ahead of the elections on Tuesday, with recent polls indicating a close race between Donald Trump and Kamala Harris.

The recent uptick in the dollar and Treasury yields suggested investors may be positioning for a Trump win, which could lead to inflationary policies. Analysts believe that the election outcome could significantly influence market performance, particularly in the Big Tech sector.

Wedbush analysts expressed concerns about a potential Trump victory leading to escalated US-China tech tensions and tariff increases. This change could negatively affect companies like Nvidia and potentially impact Apple and Tesla due to retaliatory actions from Beijing, ultimately slowing down the AI revolution.

Additionally, NVIDIA Corporation is set to join the Dow Jones Industrial Average, replacing struggling chipmaker Intel this Friday. Earnings season continues with a fifth of S&P 500 companies expected to report their quarterly earnings this week.

Earnings Season Continues

Berkshire Hathaway Inc Class A posted weaker than expected Q3 operating earnings of $10.1B, below analyst forecasts, driving the stock down over 2%.

Marriott International saw a 1.6% decline after the hotel operator lowered its annual profit forecast amid weak domestic travel demand in the U.S. and China.

Viking Therapeutics stock fell by 13% due to concerns about the company’s ability to mass-produce its oral weight-loss drug, overshadowing better-than-expected results from a Phase 1 trial.

Fed Set to Cut Interest Rates

The focus this week also includes a Fed meeting, with expectations of a 25 basis point rate cut following a 50 bps cut in September.

Markets are eager for any commentary regarding future rate cuts, especially in light of recent economic data indicating resilience in the U.S. economy and sustained inflation, which dampens the outlook for reduced rates.

UBS anticipates the FOMC will announce a 25 bp cut but suggests any commitment to a future monetary easing pace is unlikely. Fed Chair Jerome Powell is expected to maintain a data-driven policy approach.

The meeting follows nonfarm payroll data from Friday, which showed a sharp slowdown in job growth for October, along with downward revisions for the preceding two months indicating a cooling labor market.

(Peter Nurse, Ambar Warrick contributed to this article.)