Adds U.S. market close, analyst comment, oil settlement

By Chibuike Oguh

NEW YORK, Oct 22 (Reuters) -Global stocks dropped for the second straight session while U.S. yields rose on Tuesday amid market uncertainty ahead of the U.S. election as well as the outlook on interest rate cuts.

Democratic Vice President Kamala Harris held a marginal lead of 46% to 43% over Republican former President Donald Trump, according to a Reuters/Ipsos poll, as both candidates vie to capture swing states ahead of Nov. 5.

The benchmark S&P 500 and the Dow finished lower in choppy trading driven by losses in industrials, materials and utilities stocks. The Nasdaq ended higher as investors digested corporate results from companies across sectors in the U.S. economy.

The Dow Jones Industrial Average .DJI fell 0.02% to 42,924.89, the S&P 500 .SPX fell 0.05% to 5,851.20 and the Nasdaq Composite .IXIC rose 0.18% to 18,573.13.

The pan-European STOXX 600 index .STOXX finished down 0.21%. MSCI's gauge of stocks across the globe .MIWD00000PUS fell 0.29% to 851.14.

"Yields being up is a big headwind," said David Spika, chief markets strategist at Turtle Creek Wealth Advisors in Dallas. "We've seen the largest increase post a rate cut in the 10-year in the last 30 years ... I think the bond market is telling us don't be pricing in a whole bunch of rate cuts anytime soon. To expect the Fed to just be cutting rates 50 basis points every meeting is not realistic."

The odds that the Fed will deliver a quarter-point cut at its Nov. 7 meeting are at 92%, while the chance of no rate cut is at 8%, according to CME's FedWatch tool. Benchmark 10-year Treasury yields US10YT=RR were up 2.2 bps at 4.204%, after earlier reaching 4.222%, the highest level since July 26.

The U.S. dollar rose to a fresh 2-1/2-month high amid Fed rate cut expectations. The dollar index =USD, which measures the dollar against a basket of currencies, including the yen and the euro, rose 0.13% to 104.09, after hitting 104.10, its highest since Aug. 2.

Against the Japanese yen JPY=EBS, the dollar strengthened 0.21% to 151.14. Sterling GBP=EBS weakened 0.05% to $1.2978, while the euro EUR= was down 0.17% at $1.0797.

"Some people have been speculating that there's a Trump trade going on or as Trump's election odds increase, the 10-year yield and long term bond yields have increased as well as stocks. I don't really buy that quite yet," said Eric Wallerstein, chief markets strategist at Yardeni Research in Santa Monica, California.

"I think the election odds are fairly split between Trump and Harris, and broadly, it's a story of stronger economic growth."

Oil prices rose for the second consecutive session, as traders downplayed hopes of a Middle East ceasefire and focused on a tightening global supply and demand balance.

Brent crude futures LCOc1 for December settlement rose 2.36% to $76.04 per barrel. U.S. West Texas Intermediate futures CLc1 for November delivery, which expire after Tuesday's settlement, rose 2.17% to $72.09 a barrel.

Gold hit an all-time peak. Spot gold XAU= rose 1.03% to $2,747.56 an ounce. U.S. gold futures GCcv1 settled 0.8% higher at $2,759.8.

"You have an election coming where both candidates are looking to spend more and it's not good for deficits," said Eric Beyrich, co-chief investment officer at Sound Income Strategies in New York. "It's also an environment where people don't expect the kind of interest rate cut as they did before."

Reporting Chibuike Oguh in New York; Editing by Alison Williams, Barbara Lewis and Matthew Lewis

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