Polls between Democratic candidate Hillary Clinton and Donald Trump, her Republican counterpart, have narrowed considerably in recent weeks. According to an NBC News/Wall Street Journal poll released last week, Clinton held a six-point lead over Trump heading into the debate. A Bloomberg poll released Monday showed both candidates were deadlocked.
"I feel both candidates do not deserve the presidency, but from an economic standpoint, Hillary Clinton is the lesser of two evils," Cardillo said.
The first of three debates will be held at Hofstra University and is set to begin at 9 p.m. ET.
"This is a market thinking about several things. First and foremost, the U.S. election. The market is used to pricing in monetary policy, but a national election is a bit more difficult," said Art Hogan, chief market strategist at Wunderlich Securities.
Hogan added investors were also focusing on an OPEC meeting taking place in Algiers. Crude oil prices gained on Monday, after media reports cited the Algerian energy minister saying all options were possible for an output cut or freeze. U.S. oil rose 3.26 percent to settle at $45.93 per barrel.
But Schwab's Frederick said "OPEC is a much less cohesive cartel than it once was," adding that Saudi Arabia doesn't have the same pricing power it once had.
"Whatever happens with the OPEC meeting is irrelevant. I think oil prices are going to go higher," First Standard's Cardillo said.
Investors also monitored shares of Deutsche Bank, which hit an all-time low after German Chancellor Angela Merkel had reportedly ruled out helping the bank with its U.S. legal troubles. Deutsche's stock closed 7 percent lower.
Deutsche's fall weighed heavily on European equities, with the pan-European Stoxx 600 index shedding 1.55 percent. "Looks like Deutsche Bank sneezed and we all caught a cold," said Wunderlich's Hogan. "That ... has everybody down."
"Let's be honest, when push comes to shove, the German government will be standing by Deutsche Bank if need be. We just don't know to what extent and at what cost if it were come to pass," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note to clients.
In economic news, new home sales totaled 609,000. Three Federal Reserve officials also spoke Monday. Dallas Fed President Robert Kaplan said he would've been OK with raising rates in September. Fed Governor Daniel Tarullo said in a speech the Fed will seek more capital from the largest U.S. banks and give relief to smaller banks. Minneapolis Fed President Neel Kashkari also spoke, but did not address monetary policy.
Last week, the Fed kept interest rates unchanged, sending U.S. stocks to a 1 percent weekly gain. "Within the text of their statement, it had a more hawkish tone but, if you look at the dot plot, they are still trying to guide the market on a slow rate hike path," said Casey Clark, vice president of investment strategy at Glenmede. He also said he expects the Fed to raise rates in December.
In corporate news, Carnival, Cal-Maine Foods and Vail Resorts all reported quarterly results before the bell. "We have an earnings season coming up and we have the potential for 1.5 years of negative earnings growth," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank. "It does look like third-quarter earnings at best are going to see single-digit growth growth and at worst a double-digit decline."
U.S. Treasurys rose, with the two-year yield at 0.74 percent and the benchmark 10-year note yield at 1.58 percent. The Treasury Department sold $26 billion in two-year notes.
The dollar fell 0.19 percent against a basket of currencies, with the euro near $1.126 and the yen around 100.25.