Major averages closed lower on Monday, and yields fell sharply as investors prepared for a crucial trading week ahead, featuring the U.S. presidential elections and the Federal Reserve's rate meeting. This anticipation led to increased volatility in the markets, with traders closely monitoring any developments that could impact economic policy and market sentiment.

As a result, the blue-chip Dow Jones Industrial Average (DJI) finished the day lower by 0.6%. At the same time, the benchmark S&P 500 (SP500) handed back 0.2%, and the tech heavy Nasdaq Composite (COMP:IND) concluded lower by 0.3%.

From a sector perspective, four of the 11 S&P sectors rounded out the trading session in the green with Energy and Real Estate at the forefront. Conversely, the Utilities sector experienced the steepest declines on the day.

Regarding Treasury yields, they noticed a leg lower. The shorter end more rate sensitive U.S. 2 Year Treasury yield (US2Y) fell 4 basis point to 4.17% and the longer term U.S. 10 Year Treasury yield (US10Y) dropped by 9 basis points to 4.29%.

See how yields trade across the entire curve here.

“Ahead of Election Day, US equity markets edged slightly lower with treasury bonds catching a bid. While financial market volatility remains subdued, the recent run up in treasury yields and an uptick in inflation data is likely to force the Fed to hold off on additional rate cuts at the November meeting," Seeking Alpha investing group leader Ahan Vashi of The Quantamental Investor stated.

"Given prevailing macroeconomic uncertainties, prudent investors must remain prepared for elevated volatility in the near future," Vashi added.

From an economic calendar stance, the September U.S. factory orders fell 0.5% M/M to $584.2B, compared with the 0.4% decrease that was expected and August's 0.8% retreat.

Also, earnings data continues this week with shares of Palantir Technologies (PLTR) reporting after the bell. See some other names here, scheduled to report earnings after Monday’s close.

As for stocks that were on the move, Yum China Holdings (YUMC) shares soared 7.2% after the company posted strong Q3 results.

Going the other way are shares of Constellation Energy Corporation (CEG) fell 12.4% after its latest earnings report.