US top stocks closed flat on Monday, as merger talk failed to overturn the feedback from sharply weaker oil prices and raised political uncertainty ahead of the presidential election.
The S&P 500 market bellwether closed flat at 2126, and 35 points lower on the month too.
The one sectoral outperformer, this year and this month, was the S&P 500 Utilities sector. Read more.
The US oil benchmark, West Texas Intermediate, was down 4.1% at $46.73. Oil prices fell to a five-week low Monday on lingering negative sentiment around the proposed production cuts by major oil-producing nations.
With the official meeting of the Organization of the Petroleum Exporting Countries only a month away, many market watchers openly doubt whether the cartel can organize consensus on cutting production in time.
It was more bullish for the S&P Midcap 400 which closed up 0.7% at 1509 – but 33 points lower on the month. Monday’s top gainer was Brocade Communications Systems, Inc. (NASDAQ:BRCD), up 22% at $10.60.
The S&P Smallcap 600 ended up 0.6% at 722 and led by Tidewater Inc (NYSE:TDW) up 8.1% to $1.73.
Meanwhile, investors were wary of political risk, with front runner and status quo presidential candidate Hillary Clinton’s lead over Donald Trump narrowing following revelations on Friday the FBI is investigating a further haul of potentially sensitive emails discovered since an official inquiry ended in July.
Early trading
US shares opened firmer on Monday as markets still took in Friday revelations that the FBI had a fresh haul of Hillary Clinton emails to investigate, but were also buoyed by merger news, while as-expected inflation data did little to raise or lower expectations over monetary policy.
The S&P 500 index, the market bellwether, was up 0.2% at 2129 and led by Loews Corp (NYSE:L), up 5.1% at $43.10 after its third quarter earnings beat estimates and revenues rose.
Wall Street lapped up the big announcement from General Electric (NYSE:GE) and Baker Hughes (NYSE:BHI). Last Friday it was mooted by the Wall Street Journal and on Monday became a reality.
GE is taking a majority stake in Baker Hughes to create a giant firm that will sell equipment and services to the oil and gas industry. The so-called "new Baker Hughes" will have $32bn in revenue.
GE will hold 62.5% of the new firm, and Baker Hughes shareholders will own the other 37.5%. GE shares were rising faster than its target’s shares, up 1% at $29.51 while Baker Hughes was up 0.5% at $59.43.
Meanwhile, CenturyLink (NYSE:CTL) on Monday unveiled plans to buy Level 3 Communications (NYSE:LVLT), which runs infrastructure that allows businesses connect to the internet, in a $34bn deal.
The tie-up with Level 3 will provide CenturyLink, which has historically focused on phone networks, the ability to increase its fibre-optic capacity, something that is especially important as it works to bring broadband internet to rural areas.
CenturyLink said it will pay about $66.50 per Level 3 share in a stock and cash transaction.
Level 3 shares were the second biggest riser on the S&P 500, up 4.8% at $56.64. Centurylink was down 9.6% at $27.47.
Investors have kept a keen eye on inflation since policymakers have increasingly voiced concern that inflation, which has consistently run below the central bank’s target of 2 per cent annual growth, could overheat if the Fed keeps rates near historic lows
PCE core price index month-on-month grew by 0.1% in September, in line with forecasts.
Later in the week, the Fed is set to hold its November meeting in which the central bank is expected to hold rates steady but potentially set the stage for a December rate rise. Data are also due out on the American factory sector, and the crucial US jobs report is set for release on Friday.
Wall Street closed last week on an uneasy note after revelations that the FBI has opened a fresh probe into Hillary Clinton’s use of a personal email server during her time as US secretary of state sparked volatility in the currencies, and to a lesser extent, equities market. While markets were more tranquil on Monday, the sense of uncertainty lingered.
The S&P Midcap 400 was up 0.3% at 1504 and led by Mercury General Corp (NYSE:MCY) up 10.2% at $55.61 after its third quarter earnings and increase in its quarterly dividend.
But the S&P Smallcap 600 was rowing the opposite direction, down 0.2% at 717 and dragged lower by Invacare Corp (NYSE:IVC) down 12.8% to $8.55 after a rough third quarter earnings report.
This week New York is four ahead behind London, on GMT.