Stocks finished mixed on Tuesday as early exit polls showed presidential candidate John Kerry leading in some swing states, injecting an element of uncertainty about the outcome of the presidential election, according to Standard & Poor's MarketScope. Oil prices settled lower after Monday's steep slide.
After being higher most of the day, the Dow Jones industrial average finished with a loss of 18.66 points, or 0.19%, to 10,035.73. The broader Standard & Poor's 500 index was up 0.07 point, or 0.01%, to 1,130.58. The Nasdaq composite index gained 4.92 points, or 0.25%, at 1,984.79.
In the energy markets, December NYMEX crude closed down 51 cents at $49.62 per barrel, after ranging between $50.40 and $49.55. As with other markets on this election Tuesday, trading was light, though sources suspect the close under the psychological $50 level will bring further selling to bear in the days ahead, says Action Economics.
Indeed, with no major economic reports due out Tuesday, most market watchers were focused on the election. The latest media polls showed President George W. Bush and Senator John Kerry in a statistical dead heat.
Even if there isn't a clear-cut winner by Wednesday, there will be a few economic reports to watch. Wednesday's release of October unit vehicle sales is expected to show 16.5 million units, which represents a 4% drop on the month. This is still a solid level, says Action Economics, supported by the view that bulging inventories will continue to have manufacturers find a way to move product.
Economists expect Wednesday's release of September factory orders to rise 0.4%, while shipments drop 0.5%. Inventories are expected to increase 0.3%, which would leave the inventory-to-sales ratio at 1.24 from 1.23.
And the October ISM non-manufacturing index is projected to rebound to 58.3 from September's lower than expected 56.7. The hurricanes may have damped the September reading, which suggests upside risk for October, says Action Economics. In addition, the recent stronger tone in the manufacturing sector also implies some upside risk. The market will likely take a close look at the employment component ahead of Friday's key employment report, says Action Economics.
Wednesday's earnings calendar is a bit heavy, with companies such as Time Warner (TWX ), Electronic Data Systems (EDS ), Qualcomm (QCOM ), Cigna (CI ), Duke Energy (DUK ), Estee Lauder (EL ), InterActiveCorp (IACI ), and Weight Watchers (WTW ) reporting results.
On Tuesday, money was moving into defensive groups given the uncertainty about the outcome of the presidential election, reports Standard & Poor's MarketScope. Food distributors, health care, soft drink, and tobacco stocks rose. Aiding the Nasdaq, wireless telco stocks were higher, with Nextel Communications (NXTL ) out in front on an agreement to settle legal disputes with Verizon (VZ ).
The dollar strengthened against the euro, pressuring gold prices and gold stocks. Energy stocks also fell.
Among company news, Time Warner's (TWX ) AOL unit reportedly will be laying off 700 staff members.
In the tech sector, Dell (DELL ) was sued for patent infringement by a company holding rights to computerized methods of conducting international transactions and trade. Bear Stearns also trimmed its rating on the PC sector.
National Semiconductor (NSM ) cut its second-quarter revenue guidance to $445 million to $450 million, down about 18% to 19% from the previous quarter. The chip maker says turns orders have not improved so far in its second quarter.
Forest Labs (FRX ) says it sees lower-than-expected fiscal year 2005 earnings per share of about $2.50. It notes an increase in marketing expenses related to the launch of Campral for alcohol dependence and the potential launch of Combunox for management of acute and moderate to severe pain.
Treasuries finished higher in price as equities weakened in late trading. The 10-year note yield fell slightly to 4.07%. Outside of the election, traders are preoccupied with Friday's employment report, which is expected to show some strength due to a rebound from hurricane distortions, says Action Economics.
European stock markets finished higher on Tuesday as oil prices fell. London's Financial Times-Stock Exchange 100 index was up 19.4 points, or 0.42%, to 4,693.2 as Britain's CBI retail sales rose to higher than expected gain of 11 in October from September's negative 9 reading.
Germany's DAX index gained 24.93 points, or 0.62%, to 4,037.57 following a report German retail sales fell 0.4% in September after rising 0.5% in August.
In Paris, the CAC 40 index rose 31.77 points, or 0.85%, to 3,765.84. There was little reaction to a report showing French car and truck sales fell in October on fewer work days.
In Asia, the markets finished with strong gains on Tuesday. Japan's Nikkei 225 index rose 153.10 points, or 1.43%, to close at 10,887.81 on improved market sentiment following a sharp decline in oil prices. Banking names rose, with Mizuho Financial Group jumping nearly 4% after the bank raised its first half profit estimate by two-thirds due to lower-than-expected bad loans write-offs. But Toyota Motor declined 1.46% after the carmaker posted a surprise drop in quarterly profits, hurt by a strong yen and rising materials costs.
In Hong Kong, the Hang Seng index jumped 214.59 points, or 1.64%, to close at 13,308.74, driven by industrial names like Yue Yuen and COSCO Pacific.