By Riva Gold
-- S&P 500 down 0.2%; Stoxx Europe 600 and Nikkei basically flat
-- 10-year Treasury yield little changed at 1.828%
-- U.S. crude oil down 0.2%
U.S. stocks slipped early Tuesday, but markets were broadly steady as polls opened in a fractious U.S. presidential race.
As votes were cast, stocks traded in a tight range. Many investors and analysts said they were paying close attention to the polls as the outcome remained too close to call.
Oil prices edged lower, while U.S. government bonds and the dollar were little changed.
In recent sessions, risky assets such as stocks have risen as Hillary Clinton pulled aheadin polls and sold off as the race tightened. Many investors believe stocks would fare better in the sessions immediately following a victory for Mrs. Clinton, while uncertainty around the details of Donald Trump's policy proposals would send risky assets lower in the short-term aftermath of his election.
(Here are five markets to watch before and after the election.)
Global stocks rebounded sharply on Monday after the Federal Bureau of Investigation said over the weekend that no new evidence was found to warrant charges against Mrs. Clinton. The Dow Jones Industrial Average rose more than 2%, its best day before an election since 1932, while the S&P 500 posted its biggest gain since March and snapped its longest losing streak in nearly 36 years.
The CBOE Volatility Index -- which is based on the price of options that investors tend to buy when they are fearful of stock-market declines -- rose roughly 5% Tuesday after shedding17% Monday.
"It'll be a careful day of trading," said Quincy Krosby, market strategist at Prudential Financial. "There could still be surprises today, and I don't think the market is taking anything for granted."
The Dow Jones Industrial Average fell 28 points, or 0.2%, to 18232. The S&P 500 declined 0.2% and the Nasdaq Composite lost 0.2%.
The Stoxx Europe 600 fell less than 0.1% following a muted session in Asia.
"We are more cautious than usual," said Luca Paolini, chief strategist at Pictet Asset Management, noting he had scaled back on stocks, particularly cyclicals, and trimmed some exposure to emerging markets and U.S. high yield ahead of the vote.
The yield on the 10-year U.S. Treasury note was recently 1.828%, according to Tradeweb, compared with 1.826% on Monday. Bond yields fall when prices rise.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, was flat.
Many investorssaid the medium and longer-term economic impacts of either a Clinton or Trump presidency remained unclear.
"The most likely outcome is there is not as much change as people are currently fearing," said William Davies, head of global equities at Columbia Threadneedle Investments, noting he removed very little risk from his portfolios ahead of the vote, with neither candidate expected to be able to push through many of their stated policy objectives if Washington is divided.
Historically, stocks have risen more often than not in the period from election day through the inauguration, according to the WSJ Market Data Group, which looked at the 30 presidential elections since the creation of the Dow Jones Industrial Average. The Dow industrials have risen an average of 4.6% when the same party remained in power, and declined an average of 4% from election day to inauguration day after a party change.
Mr. Paolini said he was prepared to consider adding to his portfolio should investors overreact to the presidential result. Longer term, the market tends to be driven by corporate profits, the economy, and monetary policy, which currently look strong in the U.S. for the next few months, he said.
While stock markets fell in recent sessions, U.S. earnings quietly beat expectations, with S&P 500 earnings on track to grow in the third quarter from the year-earlier period, according to FactSet, after five consecutive quarters of contraction.
In currency markets, the dollar was 0.2% higher against Japan's yen. On Monday, the dollar had its biggest one-day jump against the haven currency since July.
The Mexican peso was little changed against the dollar after rising on Monday. Following Mr. Trump's comments on Mexico during the campaign, should he win the election, "the peso is the number one target," said Alexis Hombrecher, founding partner at hedge-fund manager Whard Stewart.
In commodities, U.S. crude oil fell 0.2% to $44.82 a barrel, while gold climbed 0.7% to $1,288.50 an ounce -- both changing direction from a day earlier.
Shares in Asia mostly inched slightly higher, bolstered by the gains on Wall Street, but moves were muted ahead of the U.S. vote. Hong Kong's Hang Seng advanced 0.5%, while Australia's S&P/ASX 200 added 0.1%. Japan's Nikkei Stock Average fell less than 0.1%.
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(END) Dow Jones Newswires
November 08, 2016 11:13 ET (16:13 GMT)
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