Shares drop in Wall Street afternoon trading on Wednesday as election results continue to emerge mid-term and still do too early to say whether the Republicans would gain control of one or both houses of Congress.

The S&P 500 index fell 72 points or 1.9% to 3756 at 2:53 PM EST. The Dow Jones Industrial Average fell 576 points, or 1.7%, to 32,585, while the Nasdaq lost 2.3%.

Disney was down 12.1% and brought the entire communications sector lower after it said Financial results which did not live up to analysts’ expectations and issued a poor profit forecast.

The Facebook Meta Platforms were a bright spot. It went up 7.6% after it said will lay off 11,000 workers, or about 13% of its workforce, as it grapples with falling incomes and the broader problems of the tech industry. The move takes place just one week after it became known layoffs on Twitter under the new owner, billionaire Elon Musk.

Facebook’s parent company Meta announces massive layoffs


Votes still counted

US mid-term votes continue to count nationwide, with Wall Street waiting to see if Balance of power in Washington. Elections can determine what is done in Washington in the next few years, and possibly beyond. If Republicans take control of at least one House of Congress, conflicts with the Democratic White House could hinder legislative progress.

That said, the stock exchange has historically performed well both in the middle of the term and when the government is split between parties, experts say.

“While the Senate may prove a defeat with either party gaining only a small majority, investors should remember that history has shown that the two most likely results of this year’s mid-term elections show an average annual rate of return of around 13.0% for S&P. 500 Index, ”said John Lynch, director of investments at Comerica Wealth Management, in the memo.

MoneyWatch: The stock market may see an increase after the mid-term election


“Once the dust settles, the net change in the number of seats occupied by each party seems fairly small,” commented Brad McMillan, director of investment for the Commonwealth Financial Network on Wednesday.

“Politically, these small changes can make a big difference. But economic performance is likely to be much weaker, ”said McMillan, who believes that the tight division in both houses, regardless of which party is in control, ensures that fiscal policy remains relatively the same. and provide the stock market with the confidence it craves.

“At this Congress we will see nothing, even vaguely controversial, which means we know to a large extent that the current fiscal policy will remain in force: no tax cuts and no large spending on spending over the next two years. confidence around much of the economics textbook. And that’s a good thing from a market perspective, ”he said.

Stubborn inflation

Wall Street’s main problem remains constantly hot inflation and the Federal Reserve’s fight against high prices that oppressed businesses and consumers. The central bank is aggressive raising interest rates all year round to slow the economy down and curb inflation, but the strategy could go too far and lead to a recession. Investors watched the economic data closely, looking for hints that inflation could cool enough for the Fed to consider easing interest rate hikes.

The Federal Reserve expects to raise interest rates for the sixth time in a row this year


The central bank said it might reduce the scale of the rate hikes soon, but warned that it might ultimately raise rates higher than expected due to persistent high inflation. The Fed has already raised its key overnight rate to a range of 3.75% to 4%, from practically zero in March, and more and more investors are expecting it to reach 5% next year.

“It’s like a marathon and we’re at the beginning of this stage,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

Investors are waiting for the inflation report

Investors will receive important inflation information on Thursday, when the government releases its October consumer price report. Economists expect the report to show sustained little moderation from the summer peak.

Energy prices have fallen significantly. US crude oil prices fell 2.5% and US natural gas prices 2.8%. Russia’s war with Ukraine it still hangs over the energy market and raises concerns about world oil and gas supplies.

The latest round of corporate earnings is nearing close, with several companies sharply following their results and forecasts. Sprouts Farmers Market grew by 11.7% after raising the profit forecast for this year.

In addition to earnings, Bitcoin fell 7.9% and other digital assets also plunged sharply one day after the world’s largest cryptocurrency exchange, Binance, said it could potentially buy rival FTX Trading which would be tantamount to saving. Shares of publicly traded companies with high exposure to cryptocurrency trading have also plummeted. Coinbase fell 7.8% and Robinhood Markets fell 9.2%.

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