North American stock markets retreat ahead of U.S. presidential debate

By Linda Nguyen, The Canadian Press

TORONTO – A sense of nervousness hung over North American stock markets Monday, driving major indices lower as anticipation grew ahead of the first U.S. presidential debate.

On Wall Street, the Dow Jones industrial average retreated 166.62 points at 18,094.83, while the broader S&P 500 declined 18.59 points at 2,146.10. The Nasdaq composite lost 48.26 points at 5,257.49.

A record-breaking number of viewers are expected to tune into the 90-minute televised debate between Democrat candidate Hillary Clinton and Republican candidate Donald Trump.

The U.S. election, which is still six weeks away, is considered a close race between the rivals — and market-watchers will be interested to see if the debate will give them a pulse on who may win when voters head to the polls.

“Today, in part, is at least reflecting some of the nervousness about what could or potentially result from the outcome of this campaign as it shapes the rest of the election,” said Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis.

“Whenever you’re talking about political uncertainty, that tends to be negative in the short term for equity markets. You’re going to see that reflected in various days from here until November.”

Fehr noted the markets will have more a “knee-jerk” negative reaction if Trump is declared the debate winner — and what that might mean to the economy — compared to a Clinton win.

Although stock markets may feel downward pressure ahead of the election next month, those pressures should be seen as temporary because indicators show that the economy is still growing.

“At the end of the day, regardless of the outcome of the election, it’s really going to be economic growth and interest rates that will have the most prominent influence on the market,” said Fehr.

“I expect as we move some of the cloud from this campaign, we’ll see more days where the market will react more to the economic data and less to the headlines from the campaign trail.”

In major corporate news, Pfizer, one of the world’s largest drug companies, traded lower after it said it will not split into two smaller companies. The Viagra maker saw its stock fall 62 cents, or 1.8 per cent, to US$33.64.

In Toronto, the S&P/TSX composite index fell 78.47 points at 14,619.46, with declines being cushioned by gains in mining and energy stocks.

The Canadian dollar was at 75.55 cents US, down 0.37 of a cent.

In commodities, the November crude oil contract was up $1.45 at US$45.93 per barrel and November natural gas rose four cents to US$3.07 per mmBTU.

The December gold contract rose $2.40 to US$1,344.10 an ounce, while the December copper contract was unchanged at US$2.20 a pound.

Follow @LindaNguyenTO on Twitter.

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