US stocks drop, but notch best October ever as investors weigh upcoming rate hike against upbeat earnings results

• US stocks fell slightly on Monday as investors anticipate another outsized interest rate hike from the Fed this week.
• Fed Chair Jerome Powell is expected to hike rates by another 75 basis points at its FOMC meeting on Wednesday.
• The Dow Jones notched its best month of October on record, rising 14% as third-quarter earnings came in solid.

US stocks fell on Monday but the Dow Jones Industrial Average set records as investors weigh an imminent rate hike from the Federal Reserve against solid third-quarter earnings results.

Fed Chairman Jerome Powell is expected to announced that the US central bank will raise rates by 75 basis points at its upcoming FOMC meeting in its bid to tame inflation that has been driven by higher wages, services prices, and commodity prices. After this Wednesday's meeting, the Fed is expected to hike interest rates by at least 50 basis points in December.

Aside from more rate hikes, investors continue to focus on third-quarter earnings results, which have mostly beaten expectations. So far, 52% of S&P 500 companies have reported results, and of those companies, 72% topped profit estimates by a median of 5%, according to data from Fundstrat.

The Dow Jones Industrial Average notched its best October on record, rising about 14% and exceeding the prior record of 10.6%. The strong monthly gain also represented the Dow Jones' best overall month since 1976.

Here's where US indexes stood at the 4:00 p.m. ET close on Monday:

• S&P 500: 3,871.98, down 0.75%
• Dow Jones Industrial Average: 32,732.95, down 0.39% (128.85 points)
• Nasdaq Composite: 10,988.15, down 1.03%

Here's what else happened today:

• Investors shouldn't expect the Fed to pivot away from interest rate hikes before the start of 2023, according to a note from Barclays.
• But Morgan Stanley's Mike Wilson disagrees with Barclays' assessment, arguing in a note on Monday that the Fed could pivot sooner than expected, which would help boost the S&P 500 another 6% to 4,150.
• Despite the strong rally in stocks this month, GMO's Jeremy Grantham is not convinced and still expects big downside ahead. The investor told the Wall Street Journal that holding cash remains a good idea.
• Former Goldman Sachs CEO Lloyd Blankfein took the opposite side of Grantham's view, arguing that things aren't as bad as they seem for the stock market.
• Famed short-seller Jim Chanos warned that Tesla stock is pricing in outlandish expectations, and that CEO Elon Musk is distracted by running Twitter.
• Wheat futures jumped as much as 8% on Monday after Russia's withdrawal from a deal to export Ukrainian grain via the Black Sea threatened global food supplies.

In commodities, bonds and crypto:

• West Texas Intermediate crude oil fell 2.15% to $86.01 per barrel. Brent crude, oil's international benchmark, fell 3.53% to $92.39.
• Gold dipped 0.57% to $1,635.40 per ounce.
• The yield on the 10-year Treasury rose 5 basis points to 4.07%.
• Bitcoin ticked down 0.68% to $20,388, while ether slipped 1.19% to $1,565.