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© Reuters.
By Yasin Ebrahim
Investing.com -- The Dow slumped Wednesday as an unexpectedly tight U.S. midterm election clouded the outcome on the likely winner in the battle to control congress, just a day ahead of inflation data that could further shape the Federal Reserve's thinking on rate hikes.
The Dow Jones Industrial Average slumped 2%, or 646 points, the S&P 500 fell 2%, and the Nasdaq was down 2.4%
The midterms didn’t bring the landslide victory for the Republicans, or so-called red wave that many had recently predicted.
The GOP is still widely expected to win a narrow majority in the House, leading to the divided government, but the race for the Senate is tight after Democrats fared much better than expected in key races.
But the midterms and bets on how ‘political gridlock’ has historically proved a boon for stocks may prove “short-term catalysts for people to square their positions for the rest of the year,” Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management told Investing.com’s Yasin Ebrahim in an interview on Wednesday.
The Fed is the “bigger force in the market,” Zhiwei says, ahead of inflation data due Thursday that is expected to show slowing price pressures.
Energy was the biggest drag on the broader market, down 3% following a larger than expected increase in U.S. weekly crude inventories and positive news on the Ukraine-Russia war after the Kremlin ordered troops to pull out of Kherson.
Coterra Energy Inc (NYSE:CTRA), Hess Corporation (NYSE:HES), and Occidental Petroleum Corporation (NYSE:OXY) fell more than 8%, with the latter’s mixed quarterly results that showed a miss on the bottom line further souring sentiment.
Walt Disney (NYSE:DIS), meanwhile, fell more than 13% after reporting quarterly results that fell short of Wall Street estimates, driven by weakness in its parks and media businesses. The media giant also warned about slowing growth for its Disney+ streaming platform.
In tech, Meta Platforms Inc (NASDAQ:META) bucked the trend lower to rise more than 5% after the social media company detailed plans to cut more than 11,000 jobs. The cost-cutting was welcomed by Wall Street amid frustrations about the company’s ongoing plan to invest in the metaverse.
Roblox (NYSE:RBLX) dropped 21% after the video game company reported a wider-than-expected third-quarter loss.
D.R. Horton Inc's (NYSE:DHI) better-than-expected quarterly results helped it shrug off a slip in homebuilders amid data showing mortgage rates jumped.
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