US stocks declined as disappointing earnings and renewed selling in cryptocurrencies weighed on risk sentiment. The dollar gained for the first time in four days.
(Bloomberg) — US stocks declined as disappointing earnings and renewed selling in cryptocurrencies weighed on risk sentiment. The dollar gained for the first time in four days.
The S&P 500 halted a three-day rally, with the tech-heavy Nasdaq 100 leading losses among major benchmarks. Walt Disney Co. and News Corp. tumbled after posting results that fell short of expectations.
Sentiment also took a hit from a deepening selloff in cryptocurrencies, with Binance seen increasingly unlikely to follow through on its takeover of FTX.com. Bitcoin sank almost 10% to the lowest since November 2020. Oil extended losses after a report that crude stockpiles rose.
Midterm elections also fell short of some market expectations. 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.”
Read more on elections
Five Key Takeaways From the US Midterm Elections: TOPLive
Republicans Limp Toward House Control With Senate Still in Play
Ron DeSantis Victory Sets Him on Collision Course With Trump
Every State in the US Has Finally Sent a Woman to Congress
Walt Disney sank 11% as quarterly results missed across the board, and News Corp. dropped 5% 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.
Cryptocurrencies slipped further as reports swirled around Binance Holdings Ltd.’s potential takeover of embattled rival exchange FTX.com. Meanwhile, US financial regulators are investigating whether FTX.com properly handled customer funds.
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.
More commentary
- “Portfolios will assess and adjust their risk now that the ‘uncertainty’ of the U.S. mid-term elections fading,” wrote Craig Johnson, chief market technician at Piper Sandler. “Soon enough, their focus will shift back to this week’s corporate earnings results and the upcoming October CPI data.”
- “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.
- “Elections matter, but other factors matter more for markets and the economy,” Keith Lerner, co-chief investment officer at Truist Wealth, said in a note. “The path of inflation, interest rates, monetary policy, the economy, and earnings will continue to exert the greatest influence on markets over the next year.”
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 1.1% as of 1:16 p.m. New York time
- The Nasdaq 100 fell 1.3%
- The Dow Jones Industrial Average fell 1.1%
- The MSCI World index fell 1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.5% to $1.0020
- The British pound fell 1.6% to $1.1364
- The Japanese yen fell 0.5% to 146.36 per dollar
Cryptocurrencies
- Bitcoin fell 10% to $16,802.12
- Ether fell 13% to $1,160.38
Bonds
- The yield on 10-year Treasuries advanced four basis points to 4.16%
- Germany’s 10-year yield declined 11 basis points to 2.17%
- Britain’s 10-year yield declined 10 basis points to 3.46%
Commodities
- West Texas Intermediate crude fell 2.9% to $86.37 a barrel
- Gold futures were little changed
–With assistance from Vildana Hajric, Muyao Shen, Tassia Sipahutar, Srinivasan Sivabalan and Isabelle Lee.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
