Dow closes more than 600 points lower after indecisive midterm, crypto selloff
Stocks were lower on Wednesday – after recent market gains – as the results of the midterm elections did not provide any clear answers about who would control Congress yet. A crypto selloff also weighed on markets.
The Dow Jones Industrial Average fell 646.89 points, or about 1.95%, to 32,513.94. The decline was led by Disney, which fell 13.2% after the entertainment giant missed analysts’ estimates on the top and bottom lines. The S&P 500 fell 2.08% to 3,748.57, and the Nasdaq Composite fell 2.48% to 10,353.17.
Stocks fell to session lows during Wednesday afternoon as the price of bitcoin fell into a new bear market. The declines came after crypto exchange Binance said it was pulling out of plans to acquire rival FTX, citing the results of a due diligence examination, as well as recent reports of misused customer funds and alleged US agency investigations into FTX. The decision weighed on general risk sentiment and dragged down the technology sector.
The stock market was coming off three straight days of gains in the election, with Wall Street expecting Republicans to gain ground and block any future tax and spending plans. But control over Congress was not clear. NBC News did not yet project control of the House of Representatives with an NBC estimate suggesting Republicans could end up with 222 seats, which would be a narrow majority.
In one of the key races that could decide Senate control, Democrat John Fetterman defeated Republican Mehmet Oz for the central Pennsylvania Senate seat, according to an NBC News projection. A key Senate race in Georgia between Democratic Sen. Raphael Warnock and Republican former NFL player Herschel Walker will go to the runoff Dec. 6, according to Secretary of State Brad Raffensperger. A critical Senate race in Nevada is unresolved.
“The election results remain uncertain, but the red wave that models, investors and betting markets expected did not materialize, and in the short term, that will add to already elevated volatility,” Dennis DeBusschere of 22V Research wrote in a Wednesday note.
Investors were also weary ahead of the October CPI report due Thursday morning at 8:30 a.m. ET. Economists polled by Dow Jones expect the overall CPI to grow by 7.9% from the previous year, somewhat down from September’s rise of 8.2%.
“Inflation is enemy number one for the Fed, and if you see the core CPI print creep up, I think the market will have a negative reaction to that,” said Johan Grahn of Allianz Investment Management.
Lea la cobertura del mercado de hoy en español aquí.
