By Lisa Pauline Mattackal
(Reuters) -U.S. stocks were set to open flat on Monday, as traders stayed away from large bets in an action-packed week in which Americans will elect a new president and the Federal Reserve is likely to cut its benchmark policy rate.
With a latest poll showing Democratic candidate Kamala Harris leading in Iowa ahead of a Tuesday vote, the so-called "Trump trades" lost ground, triggering a retreat in dollar, bond yields and bitcoin.
Stocks viewed as bets on Republican candidate Donald Trump's win were choppy in premarket trading, while a drop in the benchmark 10-year Treasury yield from its recent high eased pressure on the broader equity market.
Trump Media & Technology Group reversed early losses to add 1%, while software developer Phunware that made apps for Trump campaign in 2020 fell 3.7%.
Harris' odds improved on several betting sites. PredictIT showed contracts betting on a Harris victory at 53 cents versus 52 cents on former president Trump.
"This is the biggest event for markets for the year...but we think it's wisest not to make big (investment) bets," said Michael Reynolds, vice president, Investment Strategy at Glenmede.
Dow E-minis were down 17 points, or 0.04%, S&P 500 E-minis were up 6.75 points, or 0.12%, and Nasdaq 100 E-minis were up 16.5 points, or 0.08%.
The winner of the presidential race might not be known for days after voting ends on Tuesday and could result in choppy trading as investors await clarity on the policy implications.
"Usually post-election volatility subsides once investors get a sense of the rules of the road, but there's so much uncertainty right now," Reynolds said.
CBOE's VIX measure of expected equity volatility is trading at 22.38, well above its 30-day moving average of 19.44. It is, however, still way below the range of 31.8 to 41 it was trading in the week ahead of the 2020 election.
Meanwhile, investors remained largely sure of a 25 basis point interest-rate cut by the Fed in its November meeting, whose decision is expected on Thursday.
A sharply lower-than-expected October nonfarm payrolls number on Friday did little to change the bets on the size of the rate cut.
All three major indexes had declined for the week on Friday, as mixed earnings from technology megacaps led to losses in some of Wall Street's largest companies.
Chip heavyweight Nvidia jumped 2%, after S&P Dow Jones Indices said on Friday the company would replace Intel (NASDAQ:INTC) in the Dow Jones Industrial Average. Intel shares dropped 1.5%.
Hotel operator Marriott International lost 2.1% after cutting its 2024 profit forecast on weak domestic travel demand in the U.S. and China.
Constellation Energy dropped 7.6% after its results, while nuclear-powered utility Talen Energy lost 9% after regulators rejected an amended pact for an Amazon (NASDAQ:AMZN) data center connected directly to a nuclear power plant in Pennsylvania.
On the data front, September U.S. factory orders are due at 10:00 a.m. ET.