Dow closes more than 600 points lower after undecided mid-terms and a crypto selloff
Stocks were lower on Wednesday – on recent market gains – as the midterm election results have yet to provide clear answers on who will control Congress. A crypto selloff also weighed on the 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’ earnings and earnings estimates. The S&P 500 lost 2.08% to 3,748.57 and the Nasdaq Composite slipped 2.48% to 10,353.17.
Stocks fell to session lows on Wednesday afternoon as the price of bitcoin fell to a new bear market low. The declines came after Binance said it was scrapping plans to acquire crypto exchange FTX. The decision weighed on general risk sentiment and dragged the tech sector down.
The stock market recorded three straight days of gains after the election, where Wall Street expected Republicans to gain ground and block any future tax and spending plans. But congressional control was unclear. NBC News was yet to predict control of the House of Representatives with an NBC estimate suggesting Republicans could win 222 seats, which would be a slim majority.
In one of the key races that could determine Senate control, Democrat John Fetterman beat Republican Mehmet Oz for the pivotal Senate seat in Pennsylvania, according to an NBC News projection. A key Senate race in Georgia between Democratic Sen. Raphael Warnock and former Republican NFL player Herschel Walker will head to a runoff Dec. 6, according to Secretary of State Brad Raffensperger. A critical Senate race in Nevada is unresolved.
“The election results are still uncertain, but the red wave that models, investors and betting markets anticipated has not materialized, and in the short term this will add to already high volatility,” Dennis DeBusschere wrote. from 22V Research in a Wednesday note.
Investors were also weary ahead of the October Consumer Price Index report due out Thursday morning at 8:30 a.m. ET. Economists polled by Dow Jones forecast the headline CPI rose 7.9% from a year earlier, down slightly from September’s 8.2% gain.
“Inflation is the Fed’s enemy number one, and if you see the core CPI index going up, I think the market would react negatively to that,” said Johan Grahn of Allianz Investment Management.