Stocks mixed as election looms

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NEW YORK (CNNMoney) -- U.S. stocks drifted lower Monday morning, as investors turned cautious ahead of an uncertain U.S. presidential election.

The Dow Jones industrial average and the S&P 500 both fell about 0.3%. The Nasdaq was modestly higher.

The latest CNN poll indicates a dead heat in the race for the White House, with 49% of likely voters questioned in support of President Obama and an equal amount saying they back former Massachusetts governor Mitt Romney.

Investors are cautious ahead of the elections because the results will set the tone for the debate over how to address the fiscal cliff and the nation's growing debt levels. A survey by CNNMoney showed 60% of investment strategists and money managers agreed that the pending fiscal cliff poses the biggest threat to stock market. Washington's failure to address the fiscal cliff -- the simultaneous onset of tax increases and spending cuts that will be triggered on Jan. 1 -- could push the country back into recession and drive unemployment higher.

"There's a bit of nervousness in market, but it's relatively quiet in terms of data and earnings," said Paul Zemksy, head of asset allocation at ING Investment Management. "So it's hard to come up with something to focus on besides politics."

Though the election will garner the most attention this week, investors will continue to keep tabs on economic data and corporate earnings.

The Institute for Supply Management said its services sector index fell to 54.2 in October, down from 55.1 in September. It was expected to come in at 55, according to a survey of economists by Briefing.com. Any reading above 50 indicates expansion in the services sector.

In corporate news, Humana (HUM, Fortune 500) posted earnings that beat analysts' expectations and also boosted its forecast for the year.

Time Warner Cable (TWC, Fortune 500) earnings missed expectations, as the company lost 140,000 cable TV subscribers during the third quarter.

Transocean (RIG) shares edged higher after the world's largest offshore drilling rig contractor reported a better-than-expected profit for the third quarter.

Electric car maker Tesla (TSLA) reported mixed results. The company's quarterly loss widened from a year ago, and was wider than analysts were expecting. Tesla's revenue declined from a year earlier, but topped forecasts.

Shares of Netflix (NFLX) were lower after the online video streaming company adopted a shareholder rights plan in response to activist investor Carl Ichan, who announced a 10% stake in the company last week.

Stifel Financial (SF) said it would buy smaller rival bank KBW (KBW) in a deal valued at about $575 million.

Shares of Apple (AAPL, Fortune 500) edged higher after the company said it sold 3 million iPads in the three days since it launched the new iPad mini and fourth generation iPad.

U.S. stocks sank Friday afternoon as investors shrugged off a better-than-expected October jobs report and grew wary ahead of the election.

Fear & Greed Index

Overseas, investors also continue to worry about the eurozone economy. European stocks were lower in afternoon trading. Britain's FTSE 100 fell 0.5%, the DAX in Germany lost 0.6%, and France's CAC 40 dropped 0.8%.

In Greece, lawmakers are expected to vote this week on reforms aimed at securing much-needed financial support from the euro area bailout fund. Spain was also in focus Monday after reports in German and U.S. newspapers said the European Central Bank is investigating whether its requirements for Spanish Treasury bills used as collateral are too relaxed. The ECB meets Thursday for its monthly policy discussion.

German bonds rallied as investors flocked to safe assets, with the yield on 2-year German bunds turning negative.

Meanwhile, China's ruling Communist Party is preparing to shuffle its top ranks, an opaque process that will affect the country's economy and stability for years to come.

Asian markets ended slightly lower. The Shanghai Composite shed 0.1%, while the Hang Seng in Hong Kong and Japan's Nikkei fell 0.5%.

Currencies and commodities: The dollar was higher against the euro and the British pound but fell slightly versus the Japanese yen.

Oil for December delivery rose 9 cents to $84.95 a barrel.

Gold futures for December delivery added $7.30 to $1,682.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged higher, pushing the yield down to 1.69% from 1.73% late Friday.

First Published: November 5, 2012: 9:46 AM ET

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