Stocks close lower as nervous investors watch the presidential election
Stocks closed broadly lower Tuesday as nervous investors continued to monitor the run-up to the 2016 election, which is turning out to be closer than previously expected.
Newspaper stocks fell as Gannett and Tronc, publisher of the Los Angeles Times, called off a merger. Drugmaker Pfizer fell as the company cut its full-year forecast.
The Dow Jones industrial average fell 105.32 points, or 0.6%, to 18,037.10. The Standard & Poor’s 500 index fell 14.43 points, or 0.7%, to 2,111.72 and the Nasdaq composite fell 35.56 points, or 0.7%, to 5,153.58.
Increasingly, investors’ focus has been the presidential election, as polls between Hillary Clinton and Donald Trump appear to have tightened following last week’s news that the FBI had opened a new investigation into Clinton’s private email server. The narrowing in the race has introduced a new element of uncertainty into financial markets, which analysts say is likely to keep trading in check.
There were several signs of nervousness in the market. Gold prices rose, and the Mexican peso, whose decline has become a proxy for Trump’s chances to win, has been falling steadily against the U.S. dollar since Friday. The peso lost nearly 2% against the dollar, a significant move in currency trading.
“While Hillary Clinton is still expected to win the final vote, email concerns notwithstanding, next week’s outcome could well be too close for comfort,” said Michael Hewson, chief markets analyst at CMC Markets.
Read more: The latest 2016 campaign updates »
The VIX, a measure of volatility that is nicknamed Wall Street’s “fear gauge,” jumped 14% on Tuesday to its highest level since June.
“The tightening in the polls has gotten the market into a bit of a risk-reduction mode. A week ago it was a Clinton blowout. Now, all of a sudden, it’s turning into a bit of a race,” said Tom di Galoma, managing director of Treasury trading at Seaport Global Holdings.
Investors also will be watching the Federal Reserve, which will wrap up a two-day meeting Wednesday. The nation’s central bank is widely expected to keep interest rates stable because the meeting is so close to the election.
Shares of newspaper company Tronc, which publishes the Los Angeles Times and the Chicago Tribune, plunged 12% to $10.54 after Gannett said it would stop its bid to buy the company. Gannett fell 2% to $7.59.
Read more: Gannett ends six-month effort to buy Tronc »
The spin-off of Yum Brands’ operations in China jumped 8% to $26.19 on its first day of trading. Yum’s flagship brand, KFC, has been a success in China for decades and is by far the largest fast-food franchise in the country. Yum had been pressured by activist shareholders to spin off its China operations.
Drugmaker Pfizer fell 2% to $31.07 after the company reported that third-quarter profits plunged 38% despite higher sales. The mediocre results missed Wall Street expectations, and Pfizer lowered the top end of its 2016 profit forecast.
U.S. benchmark oil futures fell 19 cents to $46.67 a barrel. Brent crude, the international standard, fell 47 cents to $48.14 a barrel.
Heating oil rose 1 cent to $1.52 a gallon, wholesale gasoline rose 6 cents to $1.48 a gallon and natural gas fell 12 cents to $2.90 per 1,000 cubic feet.
U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 1.82% from 1.83%. In currency trading, the euro rose to $1.1064 from $1.0969 and the dollar fell to 103.90 yen from 104.90 yen.
Precious and industrial metals futures closed broadly higher. Gold climbed $14.90 to $1,288 an ounce, silver rose 62 cents to $18.42 an ounce and copper increased 2 cents to $2.23 a pound.
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UPDATES:
1:55 p.m.: This article was updated with closing prices, analyst comments and additional information.
11:55 a.m.: This article was updated with more recent prices and additional market and economic information.
This article was originally published at 7 a.m.
