By Wallace Witkowski and Anora Mahmudova, MarketWatch

Slump in oil futures puts pressure on energy sector

U.S. stocks closed lower after drifting between slight gains and losses Monday, finishing October with a loss, as 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.

The S&P 500 slipped 0.26 points to close at 2,126.15, with five of the 11 main sectors finishing lower, led the energy sector declining 1.2%. Utilities and real estate led gainers. The index had been up by as many as 7 points and down by nearly a point during the session.

The Dow Jones Industrial Average declined 18.77 points, or 0.1%, to close at 18,142.42, with a 0.9% gain in Chevron Corp.(CVX) shares being offset by a 1.7% 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. Nike Inc.(NKE) shares were the largest decliner on the average, shedding 3.6% following a Bank of America downgrade. The Dow had been up by as many as 32 points on the session and down by as many as 31.

Meanwhile, the Nasdaq Composite Index finished down 0.97 points at 5,189.13, after having been up 17 points earlier and down by as many as 4.

For the month, the Dow fell 0.9%, the S&P 500 declined 1.9% and the Nasdaq shed 2.3%. For the Dow and the S&P 500, it was the third straight monthly loss.

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.

"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.

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 a skittish stock market as the CBOE Volatility Index traded 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 just below 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 3.8% to settle at $46.86 a barrel as 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 is not 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 closed down 0.4%.

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

Shares of Level 3 Communications Inc.(LVLT) rose 3.9% 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 finished down more than 12%.

Valeant Pharmaceuticals International Inc.(VRX.T) shares closed down more than 12% following a report of a Department of Justice criminal probe (http://www.marketwatch.com/story/valeant-shares-drop-after-ex-ceo-cfo-said-to-be-part-of-criminal-probe-2016-10-31) of the drug maker's top execs.

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

Zimmer Biomet Holdings Inc.(ZBH) shares dropped 14% 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) settled lower, down 0.2% at $1,274.30 an ounce.

-- Barbara Kollmeyer in Madrid contributed to this article.

(END) Dow Jones Newswires

October 31, 2016 16:35 ET (20:35 GMT)

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