Seeking Alpha
2022-11-09 17:53:05
U.S. stocks plumbed session lows in choppy trading on Wednesday, as an uncertain outcome of the midterm elections and concerns over the cryptocurrency market weighed on investor sentiment. The elections did not lead to a Republican sweep , as the party looked set to gain control of the House, but the race for Congress was yet to be determined. The uncertainty reflected in the stock market as all three averages opened lower. "Election results are still uncertain, but the red wave that models, investors, and betting markets anticipated did not materialize, and near-term, that will add to already elevated volatility," 22V Research said. The indices then fell further after a report that Binance was unlikely to go through with its proposed acquisition of the struggling FTX after seeing its financials. Bitcoin ( BTC-USD ) was down more than 15%. By afternoon all three indices had fallen over 1%. The tech-heavy Nasdaq Composite ( COMP.IND ) was down 1.40% to 10,468.02 points, while the benchmark S&P 500 ( SP500 ) retreated 1.06% to 3,787.48 points. The blue-chip Dow ( DJI ) was 1.10% lower at 32,796.67 points. Nine of the 11 S&P sectors were trading in the red, with energy stocks falling the most on the uncertain election results, a jump in COVID cases in China and a criticism by the International Energy Agency of last month's OPEC+ oil cut. Real Estate was the top gainer. Truist's co-chief investment officer Keith Lerner believes that the midterm elections won't significantly alter the current economic and market trajectory. "Investors need to look well beyond the political makeup to gauge markets' risk/reward. Factors, such as the business cycle, monetary policy, and fundamentals will have a larger impact on the market’s near-term direction." Lerner said in a research note. "Stocks have risen in the 12 months following every midterm election since 1942, but there has also never been a recession in the third year of a presidential cycle," Lerner added. Market participants will also be turning their attention from the election to the CPI report due Thursday. Inflation has been one of the sticking points of President Biden's administration with voters. "A high CPI print could push terminal rate expectations higher and revive the debate about further financial condition tightening being needed. A weak print would increase expectations for an instrument pivot. Near-term vol is tied to unpredictable economic data," 22V said. "Longer-term, we expect volatility will trend lower given slowing growth and stable terminal rate expectations, but this week could be a speed bump." In earnings related news, a disappointing quarterly report sent shares of Disney tumbling more than 12% . The entertainment giant was the top S&P and Dow percentage loser. Among other movers, AI-based lending platform Upstart slumped after a soft guidance. Meta Platforms gained around 8% as Wall Street reacted positively to the Facebook parent's plans to cut jobs. Biotech Clovis Oncology cratered on bankruptcy concerns . Turning to rates, Treasury yields were struggling for direction. The 10-year Treasury yield ( US10Y ) was flat at 4.13%. The 2-year yield ( US2Y ) was down 2 basis points to 4.65%. The dollar index ( DXY ) was marginally higher by 0.6% at 110.25.
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