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Elections Uncertainty May Weigh on US Stocks

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to move to the downside following the mixed performance seen in the previous session.

The downward momentum on Wall Street comes amid uncertainty about the outcome of today?s highly anticipated midterm elections.

The elections will decide control of both the House and Senate and could have a major impact on President Donald Trump?s ability to enact his pro-business agenda.

Democrats are seen with an easier path to retaking the House than the Senate but could still be a significant thorn in Trump?s side with control of just the lower chamber.

Traders may be reluctant to make any significant moves, as the outcome of the elections may not be known until tomorrow morning.

Stocks moved in opposite directions during trading on Monday, with the Dow and the S&P 500 adding to last week’s strong gains but the tech-heavy Nasdaq extending the sharp pullback seen last Friday.

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The major averages ended the day mixed, as the Nasdaq climbed off its worst levels but still closed down 28.14 points or 0.4 percent at 7,328.85. The Dow advanced 190.87 points or 0.8 percent to 25,461.70 and the S&P 500 climbed 15.25 points or 0.6 percent to 2,738.31.

A notable drop by Apple (AAPL) weighed on the Nasdaq, with the tech giant slumping by 2.8 percent to a three-month closing low.

Apple extended the sell-off seen in the previous session after a report from Japan’s Nikkei newspaper said demand for the company’s iPhone XR appears to be disappointing.

Online retail giant Amazon (AMZN) also came under pressure after President Donald Trump told Axios his administration is looking into antitrust violations by the company.

Overall trading was somewhat subdued, however, with traders reluctant to make significant moves ahead of Tuesday’s highly anticipated midterm elections, which will decide control of both the House and Senate.

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Democrats are seen as having a much better chance to claim a majority in the House than in the Senate, but controlling the lower chamber would still allow Democrats to hinder Trump’s agenda.

The Federal Reserve’s looming monetary policy announcement also kept some traders on the sidelines, with the Fed due to announce is latest decision on Thursday.

While the Fed is widely expected to leave interest rates unchanged, traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December.

Meanwhile, traders largely shrugged off a report from the Institute for Supply Management showing a modest slowdown in the pace of growth in the service sector in the month of October.

The ISM said its non-manufacturing index dipped to 60.3 in October after climbing to 61.6 in September, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to drop to 59.3.

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Last month, the ISM said the non-manufacturing index unexpectedly rose in September, reaching its highest level since the inception of the composite index in 2008.

Natural gas stocks showed a substantial move to the upside on the day, driving the NYSE Arca Natural Gas Index up by 4 percent. With the jump, the index climbed further off the more than two-year closing low set last Monday.

The rally by natural gas stocks came amid a sharp increase by the price of the commodity, with natural gas for December delivery surging up $0.283 to $3.567 per million BTUs.

Significant strength was also visible among tobacco stocks, as reflected by the 3 percent spike by the NYSE Arca Tobacco Index.

Oil and oil service, pharmaceutical, commercial real estate and utilities stocks also saw notable strength on the day, while semiconductor stocks moved to the downside.

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Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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