Oil, dollar gain before elections, Fed decision

By Herbert Lash

NEW YORK (BestGrowthStock) – Oil prices and the dollar rose on Monday, spurred by strong U.S. and Chinese manufacturing data, as investors awaited mid-term U.S. congressional elections and more monetary easing from the Federal Reserve in the days ahead.

U.S. factory activity in October expanded and construction spending rose unexpectedly in September, reports showed. Other data showed manufacturing in China expanded at the fastest pace in six months in October.

Traders have for months been singularly focused on the Fed, which appears very close to resuming an ambitious program of large-scale asset purchases to stir the sluggish U.S. economic recovery out of its doldrums.

But investors were reluctant on Monday to make big bets ahead of the election and the Fed’s policy-setting meeting that ends on Wednesday, events that could dictate the market’s direction well into new year.

The Dow and S&P 500 posted slight gains while the Nasdaq edged lower. Gold futures ended down a half percent,

“We had a handful of positive macroeconomic data points which contributed to the better tone in markets today,” said Barry Knapp, managing director of equity research at Barclays Capital in New York.

“But the lack of follow-through underscores that Republican gains and an expansion of the Fed balance sheet are expected.”

Republicans are poised to take control of the U.S. House of Representatives from Democrats in Tuesday’s elections, but they are unlikely to take the Senate, the latest Reuters/Ipsos poll shows.

Stocks in Tokyo were poised to open lower, with the December futures contract that trades in Chicago for the Nikkei 225 off 20 points at 9,120.

The dollar’s decline has slowed in recent weeks as traders pared expectations of how aggressive the Fed might be and as bets against the dollar swelled.

The dollar was up 0.2 percent at 80.59 yen, while the euro slipped 0.4 percent to $1.3882.

Oil prices rose nearly 2 percent after comments by Saudi Arabia about consumers tolerating oil prices as high as $90 a barrel and unease about bombs found in Greece fueled earlier gains.

“Consumers are looking for oil prices around $70, but hopefully less than $90,” Saudi Oil Minister Ali al-Naimi said in comments following a speech in Singapore. “There’s almost an anchor now for the price.”

Brokers and analysts interpreted the comment as signaling the Saudis could allow prices to rise as high as $90, above the $70-$80 range the kingdom had previously deemed satisfactory.

U.S. crude for December delivery rose $1.52, or 1.87 percent, to settle at $82.95 a barrel.

In London, ICE December Brent crude rose $1.47 to settle at $84.62.

Gold futures for delivery in December settled down $7 at $1,350.60 an ounce.

Trading volume on Wall Street was light and an early 1 percent rally was erased as investors took a cautious stance.

U.S. stocks (Read more about the stock market today. ) have rallied, with the S&P 500 index up more than 12 percent since the start of September in anticipation of mid-term election and an announcement of Fed monetary easing on Wednesday.

The Dow Jones industrial average (.DJI: ) closed up 6.13 points, or 0.06 percent, at 11,124.62. The Standard & Poor’s 500 Index (.SPX: ) rose 1.12 points, or 0.09 percent, to 1,184.38. The Nasdaq Composite Index (.IXIC: ) fell 2.57 points, or 0.10 percent, to 2,504.84.

U.S. Treasury prices rose in early trading and then fell, ending the day with price losses and yield increases.

Benchmark 10-year notes traded 8/32 lower in price to yield 2.64 percent.

(Additional reporting by Steven C. Johnson, Ryan Vlastelica Emily Flitter, Robert Gibbons and Barani Krishnan; Writing by Herbert Lash; Editing by Dan Grebler)

Oil, dollar gain before elections, Fed decision