Stocks fade as nervous investors watch 2016 US election
Stocks closed broadly lower on 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 and drugmaker Pfizer fell as the company cut its full-year forecast.
The Dow Jones industrial average lost 105.32 points, or 0.6%, to 18,037.10. The Standard & Poor's 500 index lost 14.43 points, or 0.7%, to 2,111.72 and the Nasdaq composite lost 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 Mrs Clinton's private email server. The narrowing in the race has introduced a new element of uncertainty into financial markets; something that 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, which has become a proxy for Mr Trump's chances to win, has been falling steadily against the US 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.
Notably, 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 is turning into a bit of a race," said Tom di Galoma, managing director of Treasury trading at Seaport Global Holdings.
Outside of the election, investors will be watching the Federal Reserve, which wraps up a two-day meeting on Wednesday. It is widely expected the nation's central bank will keep interest rates stable, due to the meeting's proximity to the general election.
Shares of newspaper company Tronc, which publishes the Los Angeles Times and the Chicago Tribune, plunged 1.49 dollars, or 12%, to 10.54 dollars after Gannett said it would stop its bid to buy the company. Gannett fell 19 cents, or 2%, to 7.59 dollars.
The spin-off of Yum Brands' operations in China jumped 1.95 dollars, or 8%, to 26.19 dollars on its first day of trading. Yum's flagship brand, KFC, has been a success story 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 64 cents, or 2%, to 31.07 dollars after the company reported 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.
US benchmark oil futures fell 19 cents to close at 46.67 dollars a barrel on the New York Mercantile Exchange. Brent crude, the international standard, lost 47 cents to 48.14 dollars a barrel.
In other energy trading, heating oil rose one cent to 1.52 dollars a gallon, wholesale gasoline rose six cents to 1.48 dollars a gallon and natural gas fell 12 cents to 2.90 dollars per 1,000 cubic feet.
US 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 dollars from 1.0969 dollars and the dollar fell to 103.90 yen from 104.90 yen.
Precious and industrial metals futures closed broadly higher. Gold climbed 14.90 dollars to 1,288 dollars an ounce, silver rose 62 cents to 18.42 dollars an ounce and copper increased two cents to 2.23 dollars a pound.