By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market ended Monday's
choppy session slightly lower, as the S&P 500 and Dow Jones
Industrial Average retreated from fresh intraday records shortly
after hitting them in morning trade.
Trading activity, however, has been relatively tempered. A
sell-off in the energy and materials sectors, which were hit after
a sharp drop in oil prices, weighed on the S&P 500 and Dow
industrials.
A batch of mixed economic reports did not help lift sentiment,
ahead of the Tuesday's midterm elections, which likely will
contribute to the market's mood. Read: a breakdown of how the
market performs after midterm elections.
The ISM manufacturing survey index rose in October, but the
final PMI index and construction spending fell. Manufacturing data
from Europe and China were also disappointing.
The S&P 500 (SPX) hit an intraday record at 2,024.54, but
finished the day marginally lower at 2,017.81. Energy and materials
sector stocks dragged the benchmark index down, with the S&P
500 energy sub sector losing 1.7%.
The Dow Jones Industrial Average (DJI) hit an intraday record of
17, 398.54, but ended lower, shedding 24.28 points, or 0.1%, to
17,366.24.
Meanwhile, the Nasdaq Composite (RIXF) defied the general trend
and finished up 8.17 points, or 0.2%, to 4,638.
Kate Warne, investment strategist at Edward Jones, said that
after a strong October, it's not surprising to see sideways
trade.
"Typically, not all economic data will be stronger than
expected. The mixed reports are normal, as monthly data tend to be
volatile. But overall trend in the U.S. is still much more robust
than in the rest of the world," Warne said.
"The decision by the Bank of Japan [on Friday] to increase
stimulus will have a longer effect on markets as it reminds
investors that they are concerned with deflation and will not give
up fighting slow growth," she added.
Earnings support stocks: While U.S. stocks caught a good
tailwind from more central-bank stimulus, Dan Greenhaus, chief
strategist at BTIG, said in note that earnings should help stocks
to maintain gains. Earnings are growing at a nearly 10% pace, and
revenue is up 4% to 5%, beating expectations, based on the nearly
375 S&P 500 companies that have reported, he noted. Read:
Forget the BoJ! Earnings hold the key for U.S. stocks.
"As we've said for several quarters now, that is pretty darn
good and should be enough to support higher stock prices," he said.
Need to Know: Look to China as post-QE blues tangle with V-bottom
bliss
Analysts said markets will be keeping a close eye on Tuesday's
midterm elections, with a survey by The Wall Street Journal/NBC
News showing Republicans could control Congress by a slim margin.
Also read: 21 stocks that would win with a Republican Congress
In economic news, U.S. manufacturing companies expanded at a
faster rate in October as new orders rose to the second highest
level in five years, a survey of executives found.
The report contradicts the final reading of Markit's U.S.
manufacturing purchasing managers index, which was 55.9 in October,
down from the flash reading of 56.2 and well below September's
57.9. The final reading is the lowest since August.
Separately, outlays for U.S. construction projects fell
unexpectedly in September to a seasonally adjusted annual rate of
$950.9 billion, the U.S. Commerce Department reported Monday.
Looking further ahead, this is the week for the monthly U.S.
jobs report, due Friday. On Thursday, markets will be watching a
meeting of the European Central Bank.
Stocks to Watch: Shares of Sapient Corp. (SAPE) surged 42% to
$24.60 after French advertising group Publicis SA announced a $3.7
billion-all-cash deal to buy the U.S. company. Publicis will pay
$25 for each Sapient share, which represents a 44% premium to the
closing price of Sapient on Oct. 31.
Laboratory Corp. of America Holdings (LH) said it would buy
Covance Inc. (CVD) for $5.9 billion in cash and stock. Laboratory
shares dropped 7.4%, making it the biggest loser on the S&P
500. Covance shares jumped 25%.
Apple Inc. (AAPL) is planning an investor call on Monday ahead
of a potential bond sale, The Wall Street Journal reported, citing
a banker working on the deal. Shares gained 1.3%.
Sysco Corp. (SYY) said it no longer expects its acquisition of
US Foods to close this year, as it reported quarterly earnings.
Shares dropped 2.7%.
Herbalife Ltd. (HLF) shares soared 5.8% ahead of earnings.
AIG Inc. (AIG) shares rose aftermarket, as the company posted
higher profit.
(Read more about the day's notable stocks in Movers &
Shakers column:
http://www.marketwatch.com/story/sapient-surges-on-publicis-buyout-big-us-stock-movers-2014-11-03.)
Dollar above Yen113: The dollar (USDJPY) shot 1.4% higher
against then yen on Monday, trading around Yen113.87, while gold
(GCZ4) continued to drift lower.
Oil (CLZ4) priced fell sharply, with the WTI closing below $79 a
barrel. Europe stocks closed lower across the board. Asia markets
were mixed, and Tokyo was shut for a holiday.
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