By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

Better-than-expected rise in spending helps stocks to small gains

U.S. stocks were trading mostly higher Monday following better-than-expected consumer spending data, showing Americans increased spending in September by the fastest amount in three months.

Inflation as measured by the PCE index rose 0.2% in September.

Monday's economic data are consistent with previous releases suggesting the Federal Reserve is likely to raise interest rates in December.

The S&P 500 was up 2 points, or 0.1%, at 2,129, with eight of the 11 main sectors trading higher. Utilitiesand industrials led the gains. A drop in oil prices put pressure on energy companies.

"Consumer spending is a big driver of the economy, so when spending is good it means companies are able to grow their businesses," said Karyn Cavanaugh, senior market strategist at Voya Financial.

Cavanaugh noted that while 60% companies are beating earnings estimates this season, the upside for the stock market is limited as markets are fairly valued.

"Investors want to see companies not just beating lowered estimates, but showing actual growth in revenues and profits," Cavanaugh said.

The Dow Jones Industrial Average was nearly flat at 18,152. Meanwhile, the Nasdaq Composite index rose 9 points, or 0.2%, to 5,200.

Investors remained cautious following new developments in the Federal Bureau of Investigation probe into Hillary Clinton's emails and how the investigation could impact the poll numbers.

The news that FBI Director James Comey sent a letter to Congress saying the agency was taking another look at the use of a private server (http://www.marketwatch.com/story/clinton-emails-give-fbis-comey-a-second-chance-to-influence-a-presidential-election-2016-10-30) by Democratic presidential nominee Clinton while she was secretary of state sent jitters across the stock market on Friday (http://www.marketwatch.com/story/stock-market-braces-for-political-jitters-as-fed-likely-to-stand-pat-2016-10-29).

Senate Democratic leader Harry Reid said Sunday that Comey may have broken the law that prohibits federal officials from using their office to influence an election (http://www.marketwatch.com/story/harry-reid-says-fbi-director-may-have-broken-the-law-2016-10-30).

"With no further details having emerged yet, I think we'll continue to see some risk aversion on the back of this, but traders may await more information on the likely outcome before responding accordingly," said Craig Erlam, senior market analyst at OANDA, in emailed comments.

Read:'Wobbles ahead' and 'dollar volatility': what analysts expect after the FBI bombshell (http://www.marketwatch.com/story/wobbles-ahead-and-dollar-volatility-what-analysts-expect-after-the-fbi-bombshell-2016-10-31)

"Clinton had a large lead prior to the disclosure, which may also be cushioning the impact of the initial announcement," Erlam added.

The latest Washington Post-ABC News Tracking Poll (https://www.washingtonpost.com/news/the-fix/wp/2016/10/30/post-abc-poll-finds-tight-presidential-race-with-mixed-reaction-to-fbis-review-of-clinton-e-mails/) showed Republican presidential nominee Donald Trump is just 1 percentage point behind his rival Clinton, though a majority of voters polled said that news of the fresh email probe will make no difference to their vote.

Asian markets (http://www.marketwatch.com/story/asian-stocks-fall-on-renewed-worries-about-us-election-2016-10-30) saw a mostly lower finish, while the U.S. dollar (http://www.marketwatch.com/story/dollar-regains-some-strength-after-dropping-on-us-political-uncertainty-2016-10-31) , which got knocked to Yen104.46 Friday as news of the FBI probe broke, moved back up to Yen105 in premarket U.S. trading.

Oil prices drifted south on disappointment that the weekend meeting of the Organization of the Petroleum Exporting Countries failed to deliver on a concrete deal (http://www.marketwatch.com/story/opec-official-says-output-reduction-plan-has-taken-far-too-long-2016-10-29) over output cuts.

Data on tap: Americans increased spending in September by the fastest amount in three months, but they were also more frugal in mid and late summer than they were in the spring. Consumer spending rose 0.5% last month.

The Chicago purchasing managers' index fell to 50.6 in October from 54.2 in September.

The two-day Fed policy meeting concludes Wednesday.Most economists do not expect the central bank to act (http://www.marketwatch.com/story/jobs-report-for-october-to-set-stage-for-final-act-in-fed-interest-rate-drama-2016-10-30) on interest rates ahead of the Nov. 8 presidential election, nor ahead of Friday's nonfarm payroll data release.

Also this week, the Bank of Japan's two-day policy meeting concludes on Tuesday.

Monday M&A: General Electric Co. (GE) on Monday announced a deal (http://www.marketwatch.com/story/ge-baker-hughes-reach-deal-to-merge-oil-and-gas-businesses-2016-10-31-61033958) to create an energy powerhouse with Baker Hughes Inc. (BHI)(BHI), whose shares rose 0.8%. GE shares were modestly higher.

Shares of Level 3 Communications Inc. (LVLT) rose 4.5% after the communications-services company confirmed it will be acquired (http://www.marketwatch.com/story/level-3s-stock-surges-after-centurylink-buyout-deal-confirmed-2016-10-31) by CenturyLink Inc. (CTL) . Shares of CenturyLink slumped 9.3%.

Other markets: European stock markets traded lower as major oil companies pushed south on disappointment over no fresh deal from OPEC at the weekend.

Gold prices were slightly lower, down $2.30 to $1,274.40 an ounce.

(END) Dow Jones Newswires

October 31, 2016 10:01 ET (14:01 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.