US stocks declined following midterm elections that failed to yield a Republican sweep. The dollar gained while Treasuries were mixed.
(Bloomberg) — US stocks declined following midterm elections that failed to yield a Republican sweep. The dollar gained while Treasuries were mixed.
The S&P 500 halted a three-day rally, with declines in big tech names including Apple Inc., Amazon.com Inc. and Nvidia Corp. weighing on the Nasdaq 100. Walt Disney Co. and News Corp. tumbled after posting disappointing results.
A selloff in cryptocurrencies deepened, sending Bitcoin toward the biggest four-day slump since June. Oil extended losses after a report that crude stockpiles rose.
Investors had eyed prospects of a Republican comeback in Congress, with GOP taking control of both the House of Representatives and Senate. But US voters delivered a mixed verdict, with Republicans heading for control of the House by smaller margins than forecast and the race for Senate still wide open. That left Thursday’s inflation report the next catalyst for markets.
Republicans made some gains in their drive to take control of Congress but many of the closest races had yet to be called. The final outcome may not be known for days or even weeks if the results are as close as polls have suggested and if losers challenge results.
“It seems like we might end up essentially where we were before the elections,” Jim Paulsen, chief investment strategist at The Leuthold Group, said on Bloomberg TV. “As far as the economic and as far as the market ramifications (go), I don’t know if it will really change much. As long as there is gridlock, I think the markets are going to be okay with it.”
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Walt Disney lost 11% as quarterly results missed across the board, and News Corp. dropped 11% after posting first-quarter adjusted earnings that missed the average analyst estimate. Meta Platforms Inc. gained after Chief Executive Officer Mark Zuckerberg said the company will cut more than 11,000 jobs.
Of the 453 S&P 500 companies that have reported earnings so far this season, 111 have failed to meet analyst forecasts. Meanwhile, 12-month blended forward estimates for profit at the gauge’s companies have fallen 2.7% since mid-September.
In Europe, the equity benchmark fell for the first time in four days, dragged by travel- and automotive-industry shares. Chinese developers jumped the most in eight months as a regulator expanded financing support for the sector.
Cryptocurrencies slipped further as Binance Holdings Ltd.’s potential takeover of embattled rival exchange FTX.com highlighted how strains in the digital-asset industry are buffeting some of its top players. Bitcoin traded as much as 7.7% lower.
Thursday’s consumer-price-index data may be the next event risk for the Fed’s policy rate and comes on the heels of core consumer prices rising more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the central bank’s comfort zone.
“The market is still going to fixate on inflation, which is going to stay high and sticky at least over the next couple of quarters,” Luke Barrs, global head of fundamental equity client portfolio management at Goldman Sachs Asset Management, said on Bloomberg TV.
Key events this week:
- EIA oil inventory report, Wednesday
- US wholesale inventories, MBA mortgage applications, Wednesday
- Fed officials John Williams, Tom Barkin speak at events, Wednesday
- US CPI, US initial jobless claims, Thursday
- Fed officials Lorie Logan, Esther George, Loretta Mester speak at events, Thursday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.8% as of 10:38 a.m. New York time
- The Nasdaq 100 fell 1.1%
- The Dow Jones Industrial Average fell 0.8%
- The Stoxx Europe 600 fell 0.5%
- The MSCI World index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.4% to $1.0029
- The British pound fell 1.4% to $1.1377
- The Japanese yen fell 0.4% to 146.31 per dollar
Cryptocurrencies
- Bitcoin fell 8% to $17,205.23
- Ether fell 12% to $1,178.29
Bonds
- The yield on 10-year Treasuries was little changed at 4.12%
- Germany’s 10-year yield declined seven basis points to 2.22%
- Britain’s 10-year yield declined six basis points to 3.50%
Commodities
- West Texas Intermediate crude fell 2.3% to $86.85 a barrel
- Gold futures were little changed
–With assistance from Vildana Hajric, Muyao Shen, Tassia Sipahutar and Srinivasan Sivabalan.
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