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Tuesday, January 18, 2022

US stocks waver as traders use caution ahead of election

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Stocks were mostly unchanged on Monday, despite some positive economic data and a raft of big new merger announcements over the weekend.

Hesitant traders continue to watch the day-to-day developments of the US presidential election, which is slightly more than a week away.

The Dow Jones industrial average lost 18.77 points, or 0.1%, to 18,142.42. The Standard & Poor’s 500 index fell 0.26 points, or less than 0.1%, to 2,126.15 and the Nasdaq composite fell 0.97 points, or less than 0.1%, to 5,189.13.

With Monday’s close the major indexes ended the month of October broadly lower. The Dow fell 0.9%, the S&P 500 fell 1.94% and the Nasdaq fell 2.3%. It was the third-straight month of declines.

The news out late last week regarding newly found emails related to Hillary Clinton’s email practices threw the election’s results into more uncertainty, which investors typically do not like. Over the weekend, the FBI obtained a warrant to begin reviewing newly discovered emails that may be relevant to the Hillary Clinton email investigation, a law enforcement official said.

(D) Hillary Clinton and (R) Donald Trump
(D) Hillary Clinton and (R) Donald Trump

“The reopening of the email investigation into Hillary Clinton certainly throws a wrench into the presidential election now just eight days away,” said John Briggs, head of fixed income strategy for the Americas at RBS, in a note to investors.

Along with the election, investors have two heavyweight events on the economic front this week: a meeting of the Federal Reserve and the October jobs report.

It is widely expected that the Fed’s policymakers will not raise interest rates so close to the election and will wait until the December meeting to raise rates. However, any economic observations from the bank will be important to investors. The jobs report will be the last major piece of economic data out before the November 8 election.

It is also a busy week for corporate earnings, with more than one-fifth of S&P 500 companies reporting their quarterly results.

Wall Street got another wave of mega mergers over the weekend. General Electric announced it would merge its oil and gas division with Baker Hughes, creating a new company with 32 billion dollars in annual revenue. GE rose fell 12 cents, or 0.4%, to 29.10 dollars while Baker Hughes fell 3.72 dollars, or 6.3%, to 55.40 dollars.

Separately, telecommunications company CenturyLink announced it was purchasing competitor Level 3 Communications for 24 billion dollars. CenturyLink fell 3.81 dollars, or 12.5%, to 26.58 dollars and Level 3 rose 2.10 dollars, or 4%, to 56.15 dollars. Earlier this month AT&T announced it would buy Time Warner for 80 billion dollars.

The wave of mergers was not limited to the US. On Monday three of Japan’s largest shipping companies announced they would merge their shipping container operations.

US government bond prices rose slightly. The yield on 10-year Treasury note fell to 1.83% from 1.85% on Friday. The dollar rose against the euro, pound and the Japanese yen.

US benchmark oil futures extended their losses after falling last week to their lowest price this month. Crude fell 1.84 dollars to 46.86 dollars a barrel in New York. Brent crude, the international standard, fell 1.41 dollars to 48.30 dollars a barrel.

In other energy commodities, wholesale gasoline fell two cents to 1.45 dollars a gallon and heating oil fell five cents to 1.496 dollars a gallon. Natural gas fell eight cents to 3.026 dollars per thousand cubic feet.

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