Wall Street drops as investors brace for presidential debate

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Wall Street fell on Monday as Deutsche Bank weighed on financials and investors hunkered down for the first debate between candidates Hillary Clinton and Donald Trump.

The race for the White House has so far had little discernible effect on the sentiment but that may change if Monday's encounter leaves a decisive winner.

With just over six weeks until the Nov. 8 vote, some investors see the neck-and-neck contest sparking volatility in sectors including health insurers, drugmakers and industrials.

Related: Notable presidential debate moments in history

15 notable presidential debate moments in history
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15 notable presidential debate moments in history
(Original Caption) San Francisco: Jimmy Carter (L) takes notes as Pres. Ford makes a point during the second of the presidential debates at the Palace of Fine Arts here.
Vice President Richard Nixon dabs at his chin and lip in Los Angeles on Oct. 13, 1960, during his televised debate with Sen. John F. Kennedy. Nixon was in a studio in Los Angeles, while Kennedy was in a studio in New York. This was the third in a series of debates between the two presidential candidates. (AP Photo)
Rick Perry stumbles when trying to name the three Federal Departments he would eliminate as president during the CNBC Michigan GOP Presidential Debate in Rochester, Michigan. (Photo by Ralf-Finn Hestoft/Corbis via Getty Images)
ST. LOUIS - OCTOBER 02: Democratic vice presidential candidate U.S. Senator Joe Biden (D-DE) and Republican vice presidential candidate Alaska Gov. Sarah Palin (L) greet each other at the start of the vice presidential debate at the Field House of Washington University's Athletic Complex on October 2, 2008 in St. Louis, Missouri. The highly anticipated showdown between the two vice-presidential candidates will be their only debate before the election. (Photo by Don Emmert-Pool/Getty Images)
Presidential candidate Ross Perot speaks during the 1992 Presidential Debates. (Photo by © Wally McNamee/CORBIS/Corbis via Getty Images)
CLEVELAND, United States: US Vice-President Dick Cheney points during his face off with Democratic vice-presidential candidate John Edwards at Case Western Reserve University 05 October, 2004 in Cleveland, Ohio. The vice-presidential debate is focusing on foreign and domestic policies. AFP PHOTO/Steve JAFFE (Photo credit should read STEVE JAFFE/AFP/Getty Images)
YEAR-2008 US Republican presidential candidate John McCain (R) and Democrat Barack Obama leave the table after the final presidential debate at Hofstra University in Hempstead, New York, on October 15, 2008. AFP PHOTO/Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP/Getty Images)
New York Senator and Democratic presidential candidate Hillary Clinton (L) stands on stage with rival Illinois Senator Barack Obama (C) and Republican presidential contender Arizona Senator John McCain (R) at the end of the ABC/Facebook New Hampshire debates in Manchester, 05 January 2008. AFP PHOTO/Emmanuel DUNAND (Photo credit should read EMMANUEL DUNAND/AFP/Getty Images)
(Original Caption) Omaha, Nebraska: Following their vice presidential debate, Senators Lloyd Bentsen (L) of Texas and Dan Quayle (R) of Indiana reach out to shake hands, October 5th.
NASHVILLE, TN - OCTOBER 07: Republican presidential candidate Sen. John McCain (R-AZ) (R) speaks during the debate with Democratic presidential candidate Sen. Barack Obama (D-IL) (L) at the Town Hall Presidential Debate at Belmont University's Curb Event Center October 7, 2008 in Nashville, Tennessee. Tonight's debate is the second presidential debate of three, the only one being held in the town hall style with questions coming from audience members. (Photo by Anthony Jacobs/Getty Images)
Democratic presidential candidate Michael Dukakis wipes his upper lip during the first presidential debate with his opponent U.S. Vice President George Bush in Winston-Salem, N.C., Sunday night, Sept. 25, 1988. (AP Photo/Bob Jordan)
CLEVELAND, United States: Gwen Ifill (C), moderator of the vice-presidential debate, faces US Vice-President Dick Cheney (L) and Democratic vice-presidential candidate John Edwards 05 October, 2004 during the candidates only face-to-face debate in the 2004 White House race at Case Western Reserve University in Cleveland, Ohio.The vice-presidential debate is focusing on foreign and domestic policies. AFP PHOTO/Jeff HAYNES (Photo credit should read JEFF HAYNES/AFP/Getty Images)
ATLANTA, GA - OCTOBER 13: Vice presidential candidate James Stockdale, an independent candidate, speaks during the debate at Georgia Tech 13 October, 1992 in Atlanta, GA. Stockdale debated Vice President Dan Quayle and Senator Al Gore. (Photo credit should read J. DAVID AKE/AFP/Getty Images)
(Original Caption) Kansas City: Combo of President Reagan and his Democratic opponent, Walter Mondale in their final Presidential debate of the 1984 campaign in Kansas City.
UNITED STATES - CIRCA 2000: Texas Gov. George W. Bush answers a question as Vice President Al Gore looks on during the third and final presidential debate at Washington University in St. Louis. (Photo by Harry Hamburg/NY Daily News Archive via Getty Images)

"Wall Street favors Hillary at this point because she is a known commodity. Trump is a wild card," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa. "But I don't think it's too late for Wall Street to warm up to Trump."

Pfizer fell 1.81 percent after it decided against splitting into two. The stock was the biggest drag on the S&P 500 healthcare index, which declined 1.22 percent.

The Nasdaq biotechnology index dipped 1.3 percent, with cancer drugmaker Celgene falling 2.85 percent.

SEE ALSO: FBI unveils damning report on violent crime in the US

Many view a potential Clinton presidency as negative for pharmaceutical companies because of criticisms she has made about high drug prices. Trump has promised to dismantle the Affordable Care Act, which has boosted health insurers since 2010.

Deutsche Bank's U.S-listed shares fell as much as 7.9 percent to a record low of $11.83 and triggered declines among big Wall Street banks after a German magazine said Chancellor Angela Merkel has ruled out state assistance for the lender.

The bank said it did not need the German government's help with a $14-billion U.S. demand to settle claims it missold mortgage-backed securities.

The S&P financial index fell 1.5 percent, with JPMorgan's 2.19 percent decline and Bank of America's 2.77 percent slide weighing most. The KBW Bank index fell 2.12 percent, its steepest drop since July 5 in the wake of the Brexit vote.

The Dow Jones industrial average dropped 0.91 percent to end at 18,094.83 points and the S&P 500 lost 0.86 percent to 2,146.1.

The Nasdaq Composite lost 0.91 percent to finish at 5,257.49.

It was the second consecutive day of declines on Wall Street, leaving the S&P 500 2 percent below its record high set in May but still up 5 percent in 2016.

"Investors are acting extremely nervous with regards to the debate ... and it highlights the fact that the markets are not focusing on the health of the economy, interest rates and geopolitical events," said Robert Pavlik, chief market strategist at Boston Private Wealth.

SEE ALSO: Debate winner may be declared before it has ended

The CBOE Market Volatility index, also known as Wall Street's "fear gauge", rose 17.9 percent, clocking its biggest percentage gain in two weeks.

Declining issues outnumbered advancing ones on the NYSE by a 2.56-to-1 ratio; on Nasdaq, a 3.16-to-1 ratio favored decliners.

The S&P 500 posted 2 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 63 new highs and 31 new lows.

About 5.9 billion shares changed hands on U.S. exchanges, short of the 6.8 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Nick Zieminski)

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