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Market Snapshot: Dow skids over 500 points and stocks tumble as control of Congress remains unsettled


U.S. equity indexes were in retreat on Wednesday, following a three day rally, pulled lower by energy and major technology stocks and as tight races in midterm elections left control of the U.S. House and Senate too close to call.

How are stock indexes trading

The Dow Jones Industrial Average

dropped 398 points, or 1.2% to around 32,762

The S&P 500

 shed 48 points, or 1.3% to around 3,779

The Nasdaq Composite went down 179 points, or 1.7% to 10,438

On Tuesday, the Dow Jones Industrial Average 1%, the S&P 500 increased 0.6% and the Nasdaq Composite gained 0.5%. The S&P 500 remains down 20% for the year to date.

What’s driving markets

Equity indexes slipped as the results from the U.S midterm elections trickled in but the battle to control Congress remained unclear.

“Stocks saw a run up on the rumor of a Republican wave, but investors are selling the news on election results,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

The S&P 500 index rallied over the past three sessions, partly on hopes that gains for the Republicans might deliver partisan gridlock in Washington.

A popular view on Wall Street has been that a divided government could be beneficial for equity valuations since it may reduce regulatory uncertainty, crimp the likelihood of more corporate taxes, and mean less government spending, which should help undercut inflation.

In turn, softer inflation could, at the margin, reduce the need for the Federal Reserve to continue to raise interest rates aggressively. The S&P 500 is down nearly 20% in 2022 as the Fed has raised its benchmark interest rate from effectively zero at the start of March to a range of 3.75% to 4%.

However, Richmond Fed President Thomas Barkin on Wednesday said the Fed shouldn’t stop raising interest rates for fear of sparking an economic downturn because it risks inflation coming back even stronger, requiring even stricter measures down the road.

Still, the focus on Wall Street was midterm results, stress in the crypto sector on Thursday’s inflation update, with the consumer-price index for October expected to show persistently high prices compared with a year ago, despite dramatically higher rates.

See: U.S. inflation likely to post another sharp increase in October, CPI to show

Investors have been monitoring a fresh crypto wobble. Bitcoin

was trading at a two-year low below $17,00 as investors digested news that Binance might be backing off a deal to acquire rival FTX, which has been hit by a liquidity crunch.

“What happens is that bitcoin holders invested in the stock market have to raise cash to meet margin calls,” Pavlik said, adding that the stock market gets further squeezed to the downside when couples with selling tied to the midterm elections.

In corporate earnings, Walt Disney Co.

and News Corp.

fell after posting disappointing results while declines in big tech names including Apple Inc.
, Inc.

and Nvidia Corp.

weighed on the Nasdaq-100.

The 2-year U.S Treasury yield
which is particularly sensitive to monetary policy, was trading around 4.66% on Wednesday, having flirted with 15-year high near 4.75% at the beginning of the week. The dollar index

gained 0.7% to 110.33.

There’s also worries about more potential, negative surprises on the inflation front.

“October CPI will be very important and consensus is looking for another ‘hot print’ with some seeing year-on-year surging to 9%. This shows that many armchair economists simply draw lines on both growth and acceleration,” said Tom Lee, head of research at Fundstrat, who added that he reckons the inflation number will come in softer than expected.

“All in all, this keeps us constructive on stocks into year end. And we think this rally will rise further and last longer than the 23 trading day rally following June pivot talk,” Lee said.

Companies in focus

Walt Disney Co.

shares plummeted almost 13% Wednesday, as the company wrapped up its fiscal year with record sales and its best revenue growth in more than 25 years, but executives predicted much slower sales increases in the year ahead while missing expectations for fourth-quarter earnings and sales.

Meta Platforms Inc.

stock went up almost 6.6% Wednesday after chief executive Mark Zuckerberg told employees Wednesday that he planned to lay off about 13% of the social-media company’s employee base, or 11,000 employees, as Meta works to become “leaner.”


shares lost 4.4% after SEC filings showed CEO Elon Musk sold nearly $4 billion in Tesla shares in the days following his purchase of Twitter.

DR Horton

stock gained 4.2% despite the home builder missing top and bottom line estimates for its latest quarter. It also said it would not provide guidance due to housing market uncertainty.


fell almost 10% after the cinema chain reported its 12th consecutive quarterly loss and revenue that topped analysts’ estimates after market close on Tuesday.


shares fell 2% Wednesday after the company on Tuesday tweaked its full-year sales outlook to the low end of its expected range and reported a surprise quarterly loss, but sales for the COVID-19 vaccine maker were far better than expected.

Lucid Group Inc.

stock plunged more than 18% Wednesday after the electric-car maker reported a wider quarterly loss and sales that fell short of Wall Street estimates. Lucid lost $530 million, or 40 cents a share, in the third quarter, compared with a loss of $524 million, or 43 cents a share, in the year-ago period.

Additional reporting by Jamie Chisholm

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