Stocks finished modestly higher on Monday as oil prices fell close to the $50-per-barrel-mark. A sharp drop in oil prices supported bullish sentiment, but uncertainty about the presidential election Tuesday kept the market in check, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 26.92 points, or 0.27%, to finish at 10,054.39. The broader Standard & Poor's 500 index was up 0.31 point, or 0.03%, to 1,130.51. The Nasdaq composite index gained 4.88 points, or 0.25%, at 1,979.87.
In the energy markets, December NYMEX crude settled down $1.63 per barrel to $50.13, after ranging between $52.50 and $49.30. Technical selling on the break under support of $51, and various news reports including Yukos may not be forced into bankruptcy, Nigerian workers may not strike, weaker-than-expected economic data from the U.S. and Eurozone, speculation of a Kerry win, and news Iraq exports were back to a pre-invasion level pressured prices, says Action Economics. But prices rebounded into the close on news of a pipeline explosion in Iraq, according to Action Economics.
With no major economic reports due out Tuesday, most market watchers will be focused on the election. The latest media polls showed President George W. Bush and Senator John Kerry in a statistical dead heat.
Companies on Tuesday's earnings calendar include AmeriSourceBergen (ABC), BJ Services (BJS), Clorox (CLX), International Game Technology (IGT), Prudential (PRU), and Tenet Healthcare (THC).
In economic news Monday, the October ISM manufacturing activity measure slipped to 56.8 from 58.5 in September. Employment dipped to 54.8 from 58.1. New orders were little changed at 58.3 from 58.1. Prices paid rose to 78.5 from 76.0. The data were weaker than expected and should give some support to Treasuries, while further dollar gains should be limited, says Action Economics.
September construction spending was flat, after a revised 0.9% increase in August (from an initial 0.8% gain). And September personal spending rose an 0.6%, as expected, while personal income rose 0.2% vs. an expected 0.3% gain.
On the corporate front, Oracle (ORCL) raised its $21 per share fully-financed cash offer for PeopleSoft (PSFT) to $24 a share, which it says represents its best and final offer. PeopleSoft shares jumped on the news.
Strength in select tech groups -- office electronics, application software, Internet software, and retail -- led the market's advance, according to Standard & Poor's MarketScope.
However, Dow member Merck (MRK) fell nearly 10% Monday after the Wall Street Journal reported that for years, the drugmaker sought to keep safety concerns about its Vioxx compound from spoiling the drug's commercial prospects.
Treasury prices fell Monday as oil prices slipped and the ISM manufacturing report came in weaker than expected. The yield on the 10-year note rose to 4.09%, with one day to go before the national election. The bond market shruged off fresh reports from renowned Fedwatchers that the Fed could engineer a policy pause (i.e., refrain from hiking rates) in December, says Action Economics.
European stock markets finished higher on Monday. London's Financial Times-Stock Exchange 100 index was up 49.6 points, or 1.07%, to 4,673.8 as Britain's October CIPS manufacturing PMI rose to a higher than expected 53.0 level from 52.2 in September.
Germany's DAX index gained 52.39 points, or 1.32%, to 4,012.64 even though German PMI dropped to 52.8 from 54.1 in September and oil prices rose. In Paris, the CAC 40 index rose 27.25 points, or 0.74%, to 3,734.07 even though French PMI dropped to 53.5 from 54.0 in September.
In Asia, the markets finished mixed on Monday as investors stayed sidelined ahead of the U.S. presidential election on Tuesday. Japan's Nikkei 225 index fell 36.71 points, or 0.34%, to close at 10,734.71, with activity focused on small caps. Investors sold shares of firms which reported weak earnings results, with NTT DoCoMo down 1.6%, while Olympus tanked 5.11%.
In Hong Kong, the Hang Seng index rose 39.59 points, or 0.3%, to close at 13,094.25 in cautious trade ahead of the U.S. presidential election.