By Wallace Witkowski and Anora Mahmudova, MarketWatch

Slump in oil futures puts pressure on energy sector

U.S. stocks edged modestly higher Monday after stronger-than-expected consumer spending data underlined the view that the economy is growing at a steady pace, while a drop in oil prices and election uncertainty weighed on the minds of investors.

Data earlier showed Americans increased spending in September by the fastest amount in three months, while inflation as measured by the PCE index, favored by the Federal Reserve, rose 0.2%.

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

However, a renewed selloff by oil futures (http://www.marketwatch.com/story/oil-prices-slump-as-doubts-grow-over-opec-output-deal-2016-10-31) amid increased doubts that major oil producing nations will cut production capped gains.

The S&P 500 rose 3 points, or 0.2%, at 2,130, with eight of the 11 main sectors trading higher and the energy sector declining 1%. Utilities and real estate led the gains.

"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% of 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 advanced 12 points to 18,173, with a gain in Chevron Corp.(CVX) shares being offset by a decline in ExxonMobil Corp.(XOM) shares following a Goldman Sachs note (http://blogs.barrons.com/stockstowatchtoday/2016/10/31/goldman-sachs-dump-exxon-buy-chevron/) recommending dumping ExxonMobil for Chevron. Meanwhile, the Nasdaq Composite Index rose 6 points, or 0.1%, to 5,196.

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).

"Everybody is focused on the Clinton email story waiting for more detail from the FBI," said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

Add to that the Federal Reserve's two-day policy meeting concluding on Wednesday and a heavy week of data, and you get the unusual situation where the stock market is up slightly and the CBOE Volatility Index is up more than 6% on the session, following a creeping up of the so-called fear-index last week, Frederick said.

Most economists do not expect the Fed 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. Investors, however, will be combing the Fed's statement for any signs of dovishness from the central bank given the high probability for a rate increase in December, Frederick said.

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)

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 U.S. trading.

Oil prices (http://www.marketwatch.com/story/oil-prices-slump-as-doubts-grow-over-opec-output-deal-2016-10-31) fell more than 3% 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.

"OPEC isnot operating as a united entity and it is no longer a big enough influencer in the market. So, people are now questioning the initial exuberance that they might come to an agreement next month," said Ian Winer, director of equity trading at Wedbush Securities.

Data on tap: Americans increased spending (http://www.marketwatch.com/story/consumer-spending-accelerates-in-september-2016-10-31)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 (http://www.marketwatch.com/story/chicago-pmi-retreats-in-october-to-softest-level-in-five-months-2016-10-31)fell to 50.6 in October from 54.2 in September.

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 slumped 6.3%. GE shares were modestly higher.

Similarly, with the slide in oil, shares of Transocean Ltd. (RIG), Hess Corp.(HES), and Chesapeake Energy Corp.(CHK) all declined more than 4%.

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 more than 12%.

Shares of Lumber Liquidators Holdings Inc. (LL) tumbled more than 16% after the company reported a worse-than-expected loss for its third quarter.

Zimmer Biomet Holdings Inc.(ZBH) shares dropped more than 13% after the medical device maker cut its forecast (http://www.marketwatch.com/story/zimmer-biomet-cuts-forecasts-shares-drop-2016-10-31).

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

Gold prices (http://www.marketwatch.com/story/gold-edges-lower-as-dollar-strengthens-2016-10-31) were slightly lower, down 0.2% $1,274.30 an ounce.

-- Barbara Kollmeyer in Madrid contributed to this article.

(END) Dow Jones Newswires

October 31, 2016 14:23 ET (18:23 GMT)

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