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* Dow up 0.2 pct, S&P 500 up 0.2 pct, Nasdaq up 0.6 pct
* Transocean shares up after results, Time Warner off on video demand
* Apple's stock gains 1.4 pct and bolsters the Nasdaq
By Atossa Araxia Abrahamian
NEW YORK, Nov 5 (Reuters) - U.S. stocks advanced modestly on Monday in light trading in one of the year's quietest sessions on the day before the U.S. presidential election.
Whatever the outcome of the race between incumbent President Barack Obama and Republican challenger Mitt Romney, the election's resolution will finally end the uncertainty that has kept the market stagnant for the past few weeks.
"No one's going to make big bets today," said Perry Piazza, director of investment strategy at Contango Capital Advisors in San Francisco.
Just 5.16 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the NYSE MKT on Monday, below this year's average daily volume of 6.5 billion.
"[The market] has been directionless over the last few weeks because of what fiscal and tax policy looks like next year. You could argue that just having the uncertainty behind us could lead to a bit of a relief rally," Piazza said.
The Nasdaq was the strongest of the three major U.S. stock indexes, helped by a rally in Apple Inc, the most valuable publicly traded U.S. company. Apple's stock rose 1.4 percent to close at $584.62. The stock has fallen 17 percent from its closing high of $705.07 on Sept. 21.
Once the election is over, the market will turn to the "fiscal cliff," the $600 billion worth of tax hikes and spending cuts that could hit the economy hard in 2013 unless Congress comes to an agreement that will soften the blow.
"I guess, academically, you could convince yourself a president doesn't generally doesn't have that much influence over the economy near-term, but the fact remains, they could impact the market," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.
A budget crisis in the United States could hamper growth around the world. On Sunday, economic leaders pressed the United States to avert the fiscal cliff in the interest of avoiding a large-scale economic slowdown
Another drag on trading volume was the residual impact of Hurricane Sandy, which has left about 30,000 to 40,000 Americans homeless. The superstorm wreaked havoc on infrastructure and housing in the Northeast.
"I think Sandy is still affecting volume a little bit," Piazza said. "Folks we deal with in New York seem to be back at work now, but they were out most of the week last week, and still have other things on their minds."
The Dow Jones industrial average advanced 19.28 points, or 0.15 percent, to end at 13,112.44. The Standard & Poor's 500 Index rose 3.06 points, or 0.22 percent, to 1,417.26. The Nasdaq Composite Index gained 17.53 points, or 0.59 percent, to close at 2,999.66.
The CBOE Volatility Index or VIX, Wall Street's favorite barometer of investor anxiety, rose 4.72 percent - a relatively big move compared with the S&P 500 - to end Monday's session at 18.42.
"It's just a few people taking positions ahead of the election, to protect themselves against a pullback," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "I think this will go on tomorrow as well," adding that he believes the market will be flat while the VIX is likely to show "a bigger move, as it's just the nature of hedging ahead of big news like the election."
The PHLX semiconductor index rose 1.6 percent and bolstered the Nasdaq.
An index of housing-related shares gained 1.8 percent.
In the energy sector, the S&P energy index gained 0.7 percent following a gain in crude oil futures prices and third-quarter earnings from two major energy companies.
Transocean Ltd , which operates the world's largest offshore oil drilling fleet, gained 5.6 percent to $48.64, a day after the company reported a higher-than-expected adjusted profit for the third quarter.
Shares of Southern Co, the second-largest U.S. power company, fell 2.5 percent to $44.62 after Southern posted third-quarter earnings. [ I D:nL3E8M54N6]
The S&P utilities index, down 1.66 percent, was the worst performing of the 10 major S&P 500 sectors a week after superstorm Sandy hit New York City and surrounding areas.
Shares of Time Warner Cable, the second-largest U.S. cable operator, lost 6.4 percent to $91.93 after the company reported a quarterly profit that missed estimates as it lost more video subscribers than expected.
BioMarin Pharmaceutical Inc surged 31.2 percent to $49.07 after the company said a late-stage trial of its experimental drug for a rare genetic disorder could improve patients' walking ability when the medicine is administered weekly. The rally in BioMarin's stock helped drive the Nasdaq biotech index up 1.7 percent.
Despite the light volume on Monday, the market's breadth was positive. Advancers slightly outnumbered decliners on the New York Stock Exchange by a ratio of 15 to 14. On the Nasdaq, about three stocks rose for every two that fell.