Market waits for election; earnings disappoint

NEW YORK (AP) -- The stock market is waiting for the presidential election as much as anyone.

The U.S. stock market struggled for direction Monday. Stocks waffled between small gains and losses, but by mid-afternoon it seemed they would finish solidly lower. The Dow Jones industrial average fell as much as 108 points before rallying in the late afternoon to finish two points higher. There wasn't any obvious catalyst for the turnaround, other than general indecision on the part of investors.

Earnings reports from toymaker Hasbro, clothing maker VF Corp., regional bank SunTrust and other companies were underwhelming. The overhang of the presidential election in two weeks didn't help either. Investors are wary of making big moves before they know who's going to be the next president.

"They need to know the playing field before they get out there and play," said Jeff Savage, regional chief investment officer for Wells Fargo Private Bank in Portland, Oregon.

David Katz, principal and senior portfolio strategist at WeiserMazars Wealth Advisors in New York, said it matters more that the election is wrapped up than who is elected.

"One could say the markets will rally stronger if the Republican candidate becomes president," Katz said. "But one way or another, the markets will have direction, and the markets like direction."

The Dow Jones industrial average ended virtually flat. It inched up 2.38 points, or 0.02 percent, to close at 13,345.89.

The Standard & Poor's 500 index was also little changed, edging up 0.62 point to 1,433.81. The Nasdaq composite index rose 11.34 to 3,016.96.

Besides the election, an economic report due Friday also has the markets in a holding pattern. That's when the government is supposed to report how much the U.S. economy grew in the third quarter. But already, company reports are signaling that consumers, who drive the bulk of economic growth, are far from healed.

Hasbro, the toymaker behind brands like My Little Pony and Transformers, said that sales for boys' products and preschool toys weakened. The stock slipped 66 cents to $38.39.

Clothing maker VF Corp., whose brands include Timberland and Wrangler, missed analysts' revenue estimates. The stock slid $7.31, hitting $159.46.

SunTrust Banks also slipped. Its third-quarter earnings jumped, but that was largely because the bank sold shares it owned in Coca-Cola. The Atlanta-based bank wrestled with higher expenses as well as low interest rates, which can crimp the profit banks make from lending out money. The stock lost 96 cents to $27.67.

Shares for Caterpillar, the world's largest construction and mining equipment company, gained $1.22 to $85.08. But the company warned that it expects lower profit and revenue for the rest of the year.

Last week, Microsoft, General Electric and McDonald's also reported third-quarter results that disappointed the market.

To be fair, most companies are reporting better-than-expected profits. But investors want to know how companies are faring on revenue. Revenue can give a more accurate picture of how a company is performing, because profits can vary widely on items like accounting charges and cost-cutting.

Katz described companies' third-quarter revenue results as "fair" and said the U.S. economy is "slow and steady."

"It is at a snail's pace," he said. "But it's certainly better than what we had."

Of the roughly 100 companies in the S&P 500 that had reported third-quarter results as of last week, 70 percent have beat analysts' estimates for profits, according to John Butters, senior earnings analyst at FactSet. But only 42 percent have beat estimates for revenue. That's the lowest since the first quarter of 2009, when the stock market hit its Great Recession lows.

Company profits so far this quarter are down 2.3 percent compared to a year ago. Revenue is down an average of 0.6 percent.

One stock that jumped was Ancestry.com, the genealogy website, which announced it will be bought by European private equity buyers. The stock popped $2.26 to $31.44. The buyers had offered $32 per share.

Apple also jumped, rising $24.19 to $634.03. The company is expected to release a smaller iPad on Tuesday, to compete with Amazon.com Inc.'s Kindle Fire and Google Inc.'s Nexus 7.

In other trading, the yield on the 10-year Treasury note rose to 1.81 percent from 1.76 percent late Friday. The euro was worth $1.3045, up slightly from Friday. Energy prices fell. Crude oil lost $1.32 to $88.73 a barrel.