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Dow closes more than 600 points lower after indecisive midterms, crypto selloff

Pro Picks: Watch all of Wednesday's big stock calls on CNBC
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Pro Picks: Watch all of Wednesday's big stock calls on CNBC

Stocks were lower on Wednesday — following recent market gains — as results of the midterm elections provided no clear answers about who would control Congress yet. A crypto selloff also weighed on markets.

The Dow Jones Industrial Average fell 646.89 points, or about 1.95%, to 32,513.94. The decline was led by Disney, which fell 13.2% after the entertainment giant missed analysts' estimates on the top and bottom lines. The S&P 500 shed 2.08% to 3,748.57, and the Nasdaq Composite slid 2.48% to 10,353.17.

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Stocks fell to session lows during Wednesday afternoon as the price of bitcoin dropped to a new bear market low. The declines occurred after crypto exchange Binance said it's backing out of plans to acquire its rival FTX, citing the results of a due diligence exam, as well as recent reports of mishandled customer funds and alleged U.S. agency investigations of FTX. The decision weighed on overall risk sentiment and dragged down the tech sector.

The stock market came off of three-straight days of gains into the election, where Wall Street was expecting Republicans to gain ground and block any future tax and spending plans. But control of Congress was not clear. NBC News was not yet projecting control of the House of Representatives with an NBC estimate suggesting Republicans could end up with 222 seats, which would be a narrow majority.

In one of the key races that could determine Senate control, Democrat John Fetterman defeated Republican Mehmet Oz for the pivotal Senate seat in Pennsylvania, according to an NBC News projection. A key Senate race in Georgia between Democratic Sen. Raphael Warnock and Republican former NFL player Herschel Walker will head to a Dec. 6 runoff, according to Secretary of State Brad Raffensperger. A critical Senate race in Nevada is unresolved.

"Election results are still uncertain, but the red wave that models, investors, and betting markets anticipated did not materialize, and near-term, that will add to already elevated volatility," Dennis DeBusschere of 22V Research wrote in a Wednesday note.

Investors were also weary ahead of the October consumer price index report due out on Thursday morning at 8:30 a.m. ET. Economists polled by Dow Jones anticipate that headline CPI grew by 7.9% from the prior year, down slightly from September's gain of 8.2%.

"Inflation is enemy number one for the Fed, and if you see the core CPI print creep up, I believe that the market would have a negative reaction to that," Allianz Investment Management's Johan Grahn said.

Lea la cobertura del mercado de hoy en español aquí.

Stocks close lower, snapping a three-day win streak

Stocks snapped a three-day win streak, closing lower Wednesday after the results of the midterm elections provided no clear answers about who would control Congress yet, and a crypto selloff weighed on markets.

The Dow Jones Industrial Average fell more than 600 points, or nearly 2%. The S&P 500 shed about 2%, and the Nasdaq Composite slid roughly 2.5%.

— Sarah Min

Bitcoin falls to new bear market low as Binance abandons deal to acquire FTX

Cryptocurrencies extended their slide for a second day Wednesday, plunging in the late afternoon as Binance abandoned plans to acquire FTX, citing corporate due diligence and recent reports of mishandled customer funds and alleged U.S. agency investigations.

Bitcoin fell 11% to $16,106.25, its lowest level since November 2020, according to Coin Metrics. It reached its all-time high of $68,982.20 one year ago Thursday. Meanwhile, ether fell 11% to $1,155.01.

— Tanaya Macheel

Fed could become 'only show in town' on economic policy if U.S. enters a recession with gridlocked government, policy strategist says

A gridlocked government coming out of the U.S. midterm elections that took place Tuesday could impact how the Federal Reserve responds to inflation in the event of a recession, said Brian Gardner, chief Washington policy strategist at Stifel.

NBC News has yet to determine which party will have majorities in each chamber of Congress with key races undecided. But Gardner said a gridlock in federal government, which was widely expected leading up to Election Day, would likely make it harder to pass fiscal policy.

That could pressure the Federal to adjust its policy on interest rate hikes accordingly if a recession takes place, he said. But he said a gridlocked government could still potentially pass smaller pieces of legislation like expanded unemployment benefits or food stamps.

"The Fed could be the only show in town for the next two years when it comes to economic policy in the U.S.," he said on CNBC's "Fast Money."

Watch the full interview here.

— Alex Harring

Stocks near session lows into final hour of trading

Stocks were near session lows heading into the final hour of trading on Wednesday. The Dow Jones Industrial Average fell 553 points, or about 1.5%, as of 3:01 p.m. ET. That's off from a low of 598 points earlier in the day. The S&P 500 shed 1.8%, and the Nasdaq Composite slid 2.3%.

The three major averages look set to snap a three-day winning streak.

— Sarah Min

Gold is breaking out while crypto and meme stocks may not be done falling, Strategas' Verrone says

Gold steadied near a one-month peak on Wednesday after being up more than 2% in the previous session and advancing 3% on Friday. It's unclear why, however.

"The yellow metal is waking up to something… what exactly? well, we're unsure at this point," Strategas' Chris Verrone said in a note Wednesday, citing a weaker dollar, inflation, recession worries, central bank pivot anxieties in the market and the crypto fallout as potential signals. "As is often the case in this business, the fundamental or macro justification for a sharp adjustment in price will likely reveal itself in time... It may take a few swings, but we've been warming to long Gold, and continue to do so today."

He added that he isn't surprised to see crypto prices tumbling.

"While yesterday's FTX news was certainly a surprise to wake up to... the price action shouldn't be," he said. "Markets are prone to accidents below downward sloping 200-day moving averages... If Bitcoin is a reflection of liquidity, we'd surmise the meme stocks aren't finished on the downside either."

— Tanaya Macheel

Roblox, Robinhood, Coinbase et al. help drive Cathie Wood's ARK and other ETFs to multi-year lows

Cathie Wood's Ark Innovation ETF (ARKK) fell as much as 6.4% Wednesday to its lowest since those pandemic days of yesteryear, March 2020, crushed by Roblox (-19%), Robinhood (-13%), Coinbase (-10%), Zoom Video (-8%), Block (-8%) and DraftKings (-7%).

The Renaissance IPO ETF (IPO) dropped as much as 5.4% to its lowest since April 2020, hurt by Affirm (-22%) and Applovin (-9%), as well as Roblox, Robinhood and Coinbase.

Meanwhile, ProShares Online Retail ETF (ONLN) touched an all-time low, dating back to its inception in July 2018. Qurate Retail (-12%), Dada Nexus (-11%), Sea (-13%), Globe-e Online (-8%) and Wayfair (-9%) led the way lower.

— Scott Schnipper, Gina Francolla

Oil prices fall

Oil prices dropped on Wednesday following data showing a greater-than-expected rise in U.S. crude stockpiles, as well as concerns that a jump in COVID-19 cases in China would weigh on demand.

Brent crude futures were down $2.51, or 2.6%, to $92.86 a barrel by 2:26 p.m. ET. The U.S. West Texas Intermediate (WTI) crude futures had fallen $2.82, or 3.2%, to $86.08.

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— Sarah Min

Tesla, Nvidia among worst performers in Nasdaq 100

Several major Nasdaq stocks are badly underperforming the broader market on Wednesday as the Wall Street sell-off deepens.

Tesla fell more than 6% after CEO Elon Musk revealed that he sold billions of dollars of the stock, and fellow electric automaker Lucid dropped more than 18% to be the worst performer in the Nasdaq 100 after reporting a net loss of $530 million for its most recent quarter.

Semiconductors were another area of weakness, as Marvell Technologies and Nvidia fell 6.9% and 5.6%, respectively.

Speculative growth stocks, like Zoom Video and Chinese internet names Baidu and JD.com, were also among the worst performers.

— Jesse Pound

Crypto sell-off intensifies as investors worry about contagion hitting other assets

The crypto sell-off intensified Wednesday afternoon as investors continued to digest the fallout of FTX, wondering how much contagion could spread to traditional financial assets – and assessed the likelihood of Binance scrapping its offer to acquire its troubled rival.

Bitcoin fell 9% to a new bear market low of $16,521.60, its lowest level in almost two years, according to Coin Metrics. It hit its all-time high of $68,982.20 one year ago Thursday. Ether dropped 12% to $1,150.10.

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The sell-off spread to crypto equities, including exchanges, banks and mining companies. Coinbase and Robinhood fell 10% and 12%, respectively. Crypto banks Silvergate and Signature lost 9% and 6%, respectively. Hut 8 Mining Corp dropped 10% and other miners were in the red too.

— Tanaya Macheel

Stocks fall to session lows as Bitcoin falls

Stocks fell to session lows during Wednesday afternoon trading as the price of bitcoin dropped to its lowest levels in roughly two years, weighing on overall risk sentiment and dragging down the tech sector.

Bitcoin dropped more than 8% to hit $16,521.60, or its lowest level since November 2020, according to Coin Metrics.

The Dow Jones Industrial Average fell 520 points, or about 1.5%, as of 1:55 p.m. ET. The S&P 500 shed 1.7%, and the Nasdaq Composite slid 2.1%.

— Sarah Min

Stocks making the biggest moves midday

These stocks are among the biggest movers in midday trading Wednesday:

  • Lucid Motors — Shares of the RV maker lost almost 18% after the company reported a third-quarter loss and said plans to raise $1.5 billion through stock sales to fund the electric vehicle maker's operations.
  • Roblox — Shares tumbled more than 15% after the company reported a bigger loss than expected for the third quarter. The video-game company had a loss per share of 50 cents, versus 35 cents expected by analysts, according to Refinitiv.
  • Affirm — The stock plunged 18% after Affirm disappointed on earnings per share expectations, and issued weaker-than-expected guidance for its fiscal second quarter.

For more midday movers, check out our full list here.

— Tanaya Macheel

S&P rally could resume if inflation has peaked, Clocktower says

Inflation has peaked and the stock market has bottomed, according to strategists at Clocktower Group.

The firm's strategy team believes there are a number of factors that point to a peak in the Consumer Price Index. They then looked back at the average S&P 500 return following peaks in CPI since 1934, and found that the broad-market index rises.

"Despite [Federal Reserve Chair Jerome Powell's] best efforts to talk down the FOMC step-down on November 2, it is difficult to see how the Fed maintains its hawkish pace considering the about-faces by a slew of DM [developed market] central banks over the course of the past two months," the strategists wrote in a recent report.

Read more of CNBC Pro's story here.

— Michelle Fox

BMO's Brian Belski says hot CPI could signal capitulation in markets, value is supported over growth

The move to higher interest rates - or, at least rates above 0 - isn't a bad thing, according to Brian Belski, BMO chief investment strategist. Still, it may take markets a few years to normalize around higher rates as investors tend to look shorter-term.

"Doesn't mean we aren't bullish, it just means we have to be more tempered over the next six months," he said on CNBC's "Halftime Report" Wednesday.

He also noted that if Thursday's consumer price inflation report comes in hot again, it could spur a selloff that may signal market capitulation. On the flip side, markets are skittish ahead of the report and there's so much bearishness out there, it's led to pent-up demand for good news, he said.

The overall backdrop supports value stocks over growth, but he doesn't think investors need to think in such a binary fashion - generally, portfolios can and should include both. He prefers value stocks that are also growing at a reasonable price - or GARP.

"True value will be in financials, health care," he said.

In terms of technology stocks, he prefers Microsoft and Apple to Facebook, and said he doesn't mind paying a higher multiple for the earnings stability they offer.

—Carmen Reinicke

Only two sectors in the S&P 500 are positive in midday trading

Only two sectors in the S&P 500 were trading in positive territory in midday trading: Real estate and health care. The two sectors were up 0.61% and 0.16%, respectively.

Meanwhile, the broader market index was down 1.07%.

— Sarah Min

Sentiment consolidated in latest Investors Intelligence survey after early October's extreme pessimism

Bullish sentiment in the latest weekly Investors Intelligence survey of financial newsletters ended at 35.2%, down a hair from 35.8% the week before and 36.9% two weeks ago, but still far above the six-year low of 25.0% reached in early October.

Bearish opinion was also little changed, standing at 36.6%, down from 37.3% a week before, but still outnumbered bulls for an eighth straight week.

The percentage of advisors believing in a correction rose to 28.2% from 26.9% last week, but six weeks ago the percentage was 40.3%. "After the October market recovery, the number expecting a small pullback has increased," II said.

The spread between bullish and bearish opinion was little changed: -1.4 points this week vs -1.5 points last week and -1.6 points two weeks ago. In early October, the spread was -19.1 points — the widest negative difference since 2009.

The bull/bear spread is a contrarian indicator. The wider the negative divergence, the less risky stocks appear. The wider the positive divergence (the spread got as high as +45.9% in the summer of 2021), the more risk there is in stocks, by II's lights anyway.

— Scott Schnipper

Barclays initiates Logitech with a buy rating

Barclays this week initiated coverage of Logitech with a buy rating and a $65 price target, implying an upside of more than 19%.

The boost is because the firm sees Logitech as "the most underappreciated player in the space, with easier compares and a replacement cycle on the horizon led by gaming," analyst Tim Long wrote in a Nov. 9 note.

"LOGI has successfully transitioned from a mono-brand with PC dependency to a multi-brand and multi-category cloud peripherals company under the best of breed CEO Bracken Darrell," Long added. "LOGI is a market leader in two-thirds of its 30 product categories."

Read more on CNBC Pro

—Carmen Reinicke

Georgia Senate race between Warnock, Walker to head to runoff

The key Georgia senate race between Democrat Sen. Raphael Warnock and Herschel Walker, the Republican former NFL player, will go to a runoff.

Georgia's Secretary of State Brad Raffensperger announced Wednesday that neither candidate will get 50% of the vote, the amount needed to win the seat under state rules. The runoff election will be held Dec. 6.

The Georgia race was one of the most important and could ultimately help determine which party controls the Senate.

—Carmen Reinicke, Christina Wilkie

Fourth quarter earnings per share forecasts fall, with tech leading the downtrend, Credit Suisse says

Earnings expectations for the fourth quarter have dropped, with expectations for tech stocks leading the downtrend, according to Credit Suisse.

Since Sept. 30, current quarter forecasts have dropped 4.9%, which is "substantially worse than the historical 4Q average," analyst Jonathan Golub wrote in a Wednesday note.

"If the trend continues to follow 3Q, it will decline an additional -3.5% through the beginning of reporting season and increase by 2.8% as companies report," Golub wrote.

Nevertheless, Golub noted that fourth-quarter EPS forecasts "remain positive."

Lower revisions for tech stocks, as well as financial and cyclical stocks, drove the downtrend, all experience cuts of 12% to 15%, according to the note.

— Sarah Min

AMC Entertainment earnings disappoint, shares fall

AMC Entertainment reported quarterly earnings Tuesday evening that showed yet another quarterly loss despite higher revenue. Shares fell nearly 10% Wednesday.

Wall Street was not shocked by the results given AMC's track record and bearish views on the company.

AMC's revenue and adjusted earnings were below both Citi and the street's consensus, wrote Citi analyst Jason Bazinet in Nov. 8 note

"Given the small miss, we would expect a modest decline in the shares tomorrow," he added. Citi has a sell rating and target price of $1.20 on shares.

The company also announced that it has sold 14.9 million shares of its preferred equity, or APE, since the program began in September through Nov. 8. They've raised $36.5 million in the sale at $2.44 per share on average.

"It is certainly interesting to see the Company willing to sell equity 56% below where the common shares trade (and perhaps more with most of those sales taking place during 3Q)," wrote Credit Suisse analyst Douglas Mitchelson. "For AMC's profitability to improve materially enough to bring debt leverage down to a reasonable level for most equity investors would require a rebound in 2023 box office significantly beyond what we are expecting."

The firm has an underperform rating and $0.95 price target on shares.

Other analysts see a missed opportunity.

"AMC has the cash to continue operating through what we anticipate will be a strong Q4:22 and 2023 with its vast network of premium large format screens," wrote Alicia Reese of Wedbush in a Nov. 9 note. "However, we think AMC squandered a golden opportunity to pay down or even pay off its $5.2 billion debt balance when it first issued its APE shares, and we think AMC's focus on new business ventures and potential screen acquisitions is misplaced."

Wedbush has an underperform rating and $2 price target on the stock.

—Carmen Reinicke

Disney, Amazon among stocks hitting new lows

There were 12 S&P 500 stocks hitting 52-week lows during Wednesday's market decline.

  • Warner Bros. Discovery (WBD) trading at lows not seen since May 2009
  • Fox (FOX) trading at lows not seen since Nov. 2020
  • News Corp. (NWS) trading at lows not seen since Nov. 2020
  • Disney (DIS) trading at lows not seen since March 2020
  • Amazon.com (AMZN) trading at lows not seen since March 2020
  • Davita (DVA) trading at lows not seen since April 2020
  • Hasbro (HAS) trading at lows not seen since March 2020
  • UDR (UDR) trading at lows not seen since Jan. 2021
  • Essex Property (ESS) trading at lows not seen since Nov. 2020
  • AvalonBay (AVB) trading at lows not seen since Jan. 2021
  • Signature Bank (SBNY) trading at lows not seen since Jan. 2021
  • First Republic Bank (FRC) trading at lows not seen since Oct. 2020

—Gina Francolla

Investors start turning their attention back to Fed and inflation, AllianzIM's Johan Grahn says

As results continue to pour in from midterm elections, investors are turning their attention back to inflation and the Federal Reserve's efforts to squash it.

"In terms of what really matters going forward I think is more of the earnings season and then what the Fed is doing," AllianzIM's Johan Grahn said. "The election itself seems to have been kind of a dud in terms of market reaction, and clearly not the the strong wave that was being discussed before."

Investors may experience some relief on the back of election results, which could remove some uncertainty and reduce volatility for markets. But Grahn expects that inflation could "stir volatility back up" again, as market participants look ahead to Thursday's CPI report.

"Inflation is enemy number one for the Fed, and if you see the core CPI print creep up, I believe that the market would have a negative reaction to that," he added.

— Sarah Min

Fed's Barkin says 'we are doing what it takes' to bring down inflation

Richmond Federal Reserve President Thomas Barkin vowed Wednesday that the central bank will not allow inflation to become entrenched in the U.S. economy.

In a speech delivered to the Top of Virginia Chamber of Commerce, the central bank official noted the danger if expectations of higher inflation persist.

Inflation in the 1970s taught that "the Fed can't let inflation fester and expectations rise. If we back off for fear of a downturn, inflation comes back even stronger and requires even more restraint," he said.

"That's why the Fed is not waiting around for things to settle on their own time. We know inflation is painful and everyone hates it," Barkin added. "We have been mandated by Congress to maintain stable prices and we are doing what it takes to get inflation back to our 2 percent target. That's one place I can assure you we are headed back to normal."

Barkin is a nonvoting member of the rate-setting Federal Open Market Committee.

—Jeff Cox

Estimates appear too high for Apple, Bernstein says

Bernstein's Toni Sacconaghi said Apple's latest press release added to concerns about the tech giant's future performance and what that means for its valuation.

"Following two strong years, we don't expect Apple to grow revenues in FY 23, iPhone 14 strength remains a wildcard, and consensus estimates appear too high," he said in a note to clients. "Moreover, Apple's valuation remains elevated vs. history and its tech peers."

Apple was the standout among Big Technology stocks when reporting earnings this season. But worries still remain over the performance of iPhone 14 models.

A press release from Apple stated the company "now expects lower iPhone 14 and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products." due to a Covid-related lockdown at a facility. Sacconaghi said the language around "pushed" out shipments was "coy" and didn't clarify whether shipments are just delayed or if demand is sliding.

These concerns come as Apple is valued at a relative premium compared to other Big Tech names and consumer-focused companies more broadly, he said.

Apple, like other pandemic winners, has dropped sharply this year along with the broader stock market. The stock has lost 22.7% compared with the start of 2022, though its value is still nearly 90% higher than where it started 2020.

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— Alex Harring

Array Technologies shares jump after earnings

Shares of Array Technologies jumped 13% Wednesday after the solar energy company reported a strong beat on the top and bottom lines in its latest quarterly results.

Array Technologies reported earnings of 19 cents per share on revenue of $515 million. Analysts were expecting earnings of 10 cents per share on revenue of $406.9 million, according to consensus estimates on FactSet.

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— Sarah Min

‘Stunning’ developments in cryptocurrencies shouldn’t spill beyond crypto market, says El-Erian

What's happening with cryptocurrencies is "stunning" but there will unlikely be meaningful contagion beyond the crypto market, said Mohamed El-Erian, chief economic adviser to Allianz and president of Queens' College, Cambridge.

On Tuesday, Binance and FTX announced they were merging to address Bianance's liquidity crunch. The news sent cryptocurrencies spiraling downward. They were under pressure again on Wednesday, with Bitcoin and ether down by 4% and 7%, respectively, according to Coin Metrics.

"The good news is, unlike banks they are not part of the payments and settlement system so we don't have to worry about big systemic effects," El-Erian said on CNBC's "Squawk Box."

However, regulators will be playing "massive" catch up.

"The amount of irresponsible leveraging that has been taken, the cross ownership of assets. This sort of thing should not happen," he said. "What they are seeing, I suspect, will keep them up at night. "

Michelle Fox

Cyclicals will outperform defensives regardless of the midterm election results, strategist says

Cyclicals will outperform defensives from here, even if the strong Republican win investors were anticipating is not realized, according to 22V Research's Dennis DeBusschere.

"Ultimately this backdrop favors Cyclicals over Defensives no matter who wins. Defensive valuations are exceptionally high relative to Cyclicals, Defensives cash return yields are narrowing relative to risk-free rates, and earnings sentiment for Defensive groups is deteriorating further while Cyclicals are stabilizing," DeBusschere wrote in a Wednesday note.

However, the strategist said investors should keep in mind one big caveat: A deep recession — though DeBusschere said he does not currently hold that scenario as his base case.

— Sarah Min

Roblox shares tumble on earnings

Shares of Roblox dropped more than 16% in premarket trading after reporting a bigger loss than expected before the bell.

The video-game company had a loss per share in the third quarter of 50 cents, versus 35 cents expected by analysts, according to Refinitiv. However, Roblox beat on bookings revenue, which came in at $702 million compared to the $686 million expected.

Roblox shares are down about 62% year to date.

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— Michelle Fox, Ashley Capoot

Stocks making the biggest moves premarket

Check out the companies making headlines before the bell:

  • Walt Disney (DIS) – Walt Disney tumbled 7.4% in the premarket after missing top and bottom line estimates for its latest quarter. Disney's profits took a hit from higher costs at its Disney+ streaming service, and the company plans to cut marketing and content budgets.
  • Affirm Holdings (AFRM) – Affirm Holdings plunged 12.2% in premarket trading after the buy-now-pay-later firm reported a wider-than-expected quarterly loss. Affirm has been particularly popular among buyers of Peloton bikes, and is seeing an impact from slowing Peloton equipment sales.
  • Upstart Holdings (UPST) – Upstart plummeted 23.8% in premarket action after the AI-driven lending platform issued a much weaker-than-expected revenue forecast for the current quarter, citing challenging economic conditions.

Read the full list here.

— Peter Schacknow

Tesla shares higher in the premarket despite Musk's stock sale

Shares of Tesla were up 1.5% in Wednesday premarket trading even after CEO Elon Musk sold at least $3.95 billion worth of shares in the company. The sale comes after he closed a $44 billion acquisition of Twitter.

Musk sold 19.5 million additional shares of Tesla, according to filings with the Securities and Exchange Commission.

Previously this year, Musk sold more than $8 billion worth of stock in April, and about $7 billion worth in August. In 2021, he sold about $22 billion worth of shares.

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— Sarah Min, Lora Kolodny

Disney shares fall further in the premarket

Shares of Disney were down more than 7% in Wednesday premarket trading after reporting disappointing results in its most recent quarter.

The media company missed earnings per share and revenue estimates, though it posted stronger-than-expected subscriber growth in its streaming business.

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— Sarah Min, Sarah Whitten

Key U.S. midterm races uncalled

Key elections in the U.S. remained too close to call Wednesday morning.

NBC News has yet to call key House of Representatives races in states like Colorado and Nevada. That's left the future of leadership within the chamber unclear.

Senate races in Georgia, Arizona, Nevada and Wisconsin also remain too early to call, which has left party control uncertain, according to NBC News.

The governorships in Alaska, Arizona, Kansas, Nevada and Oregon also remain uncalled by NBC News.

Follow CNBC's live election updates here.

— Alex Harring

John Fetterman defeats Trump-backed Dr. Oz in key Senate ract

Democrat John Fetterman has defeated the Trump-backed TV doctor Mehmet Oz in a key Pennsylvania Senate race, according to NBC news.

Fetterman tweeted about the victory just after midnight Tuesday.

"It's official. I will be the next U.S. Senator from Pennsylvania," he tweeted. "We bet on the people of Pennsylvania — and you didn't let us down. And I won't let you down. Thank you."

The win turns a Republican-held seat to Democratic hands. Fetterman will replace GOP Sen. Pat Toomey who is retiring.

This will help Democrats, who held the smallest-possible majority in the Senate. President Joe Biden defeated former President Donald Trump in the state in 2020.

—Carmen Reinicke

Meta laying off more than 11,000 employees

Meta shares rallied more than 4% in premarket trading after the Facebook-parent said it was laying off 13% of its staff, or more than 11,000 employees.

"We're also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1," CEO Mark Zuckerberg said in a letter to employees Wednesday.

The social media stock is down more than 70% so far this year as investors have become concerned about Meta's rising costs and expenses. Meta also provided lukewarm guidance in late October for its upcoming fourth-quarter earnings.

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— Michelle Fox, Jonathan Vanian

European markets pull back as investors await U.S. midterm results

European markets were slightly lower on Wednesday as global investors await the results of the U.S. midterm elections.

The pan-European Stoxx 600 was down 0.6% by late morning, with travel and leisure stocks shedding 1.3% to lead losses as most sectors and major bourses slid into the red.

- Elliot Smith

Control of the House will not be determined tonight, NBC News says

Control of the House of Representatives will not be decided on election night, according to NBC News.

Republicans only need to gain 5 seats to take the House and were considered heavy favorites entering the day, but the red wave expected by some investors has failed to materialize. Democrats appear to have won some surprise victories in Ohio and North Carolina.

The NBC News election model currently estimates that the Republicans will end up with a three-seat advantage in the House, but that projection has a large margin of error.

If Democrats continue to hold their ground, control of the House could remain uncertain for days or even weeks. There are several competitive House races in California, a state that often takes a long time to count votes.

— Jesse Pound

Hassan wins reelection in New Hampshire, NBC News projects

NBC News is projecting that Democratic Sen. Maggie Hassan will win reelection in New Hampshire. The state was seen as a potential pick-up for Republicans, as New Hampshire is a swing state that is also projected to reelect a Republican governor.

While Hassan's seat was not considered to be as competitive as Pennsylvania and Georgia, the Democrat's ability to fend off a challenger could be an early sign that the midterm election will not feature the "red wave" expected by some investors.

— Jesse Pound

China's producer prices drop, inflation slows in October

China's producer price index fell 1.3% in October on an annualized basis after rising 0.9% in September, beating estimates for a 1.5% contraction in a Reuters poll.

The nation's October PPI marks the first decline since December 2020, according to FactSet data.

China's consumer price index rose 2.1% in October compared to a year ago, easing after climbing 2.8% in September.

The onshore and offshore Chinese yuan hovered around 7.2500 levels shortly after the economic data release.

Read the full story here.

— Evelyn Cheng, Jihye Lee

Divided government is a positive in the inflation fight, says Minerd

Guggenheim Partners' global CIO Scott Minerd said on CNBC's "Business on the Ballot" that Republican gains in Congress could help inflation ease in the coming years.

"Divided government is a great outcome. ... Divided government is going to mean very little movement on the fiscal side, which means we aren't going to get tax cuts nor are we going to get much of an increase in government spending. That's good from a standpoint of allowing the economy to cool off more and may actually limit the amount of hiking that the Fed has to do," Minerd said.

Most key races remain too close to call, according to NBC News.

— Jesse Pound

Market has been expecting a divided government for a while, Boockvar says

Stock futures have been muted so far Tuesday evening, and Peter Boockvar, chief investment officer at Bleakley Global Advisors, said there might not be a big action since a divided government is widely expected.

"We have to distill what it means for the economy and markets," said Boockvar, adding the only surprise that could come after the polls close is whether Republicans take the Senate, since the GOP is clearly expected to take control of the House of Representatives.

"It's still going to be that the end result is divided government, which I think the market has been expecting for a while now," Boockvar said.

— Patti Domm

Elon Musk sells nearly $4 billion of Tesla stock

Elon Musk sold 19.5 million shares of Tesla, worth $3.95 billion, according to filings with the Securities and Exchange Commission. The sales came after Musk acquired Twitter for $44 billion.

The selling might take a toll on Tesla's stock, which will begin premarket trading at 4 a.m. ET. Shares of the EV company is down 16% this month alone.

— Yun Li

Either Senate outcome would be market-friendly, LPL Financial says

Markets have historically preferred a mixed government, and the trend is in play if Republicans take the House, independent of what happens in the Senate, according to LPL Financial.

"Don't depend on the Senate," said LPL's Barry Gilbert and Jeffrey Buchbinder in a note. "Midterms usually provide something of a course correction from presidential elections ... and markets may anticipate prospects of a better policy balance ahead."

The research firm noted that the S&P 500 has been higher 18 out of 18 times in the following year after midterm elections dating back to 1950, with nearly identical historical returns under Democratic and Republican presidents.

— Yun Li

Market action signals a Republican House, Strategas' Clifton says

Midterm elections have been a historical tailwind for the market, according to Dan Clifton, head of policy research at Strategas Research.

"Historically you rally into the election and over the next six months you are positive six months every single time since 1950," Clifton said on CNBC special "Business on the Ballot."

The tale of the tape during Tuesday's rally is the advance in biotech, pharmaceutical, financial and defense stocks, which signaled that the market thinks the Republicans will at the very least win the House, Clifton said.

Small caps, tech and financial firms are most vulnerable to higher taxes and tougher regulations, and they could benefit from a Republican Congress, Clifton said.

— Yun Li

Don't jump to conclusions on election night, New York Life's Goodwin says

Investors should be cautious about not overreacting to early returns on election night, according to Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

"Beware premature conclusions on election night. The increased use of mail-in voting may mean that close races can't be called right away. Swings in leadership are possible," Goodwin said in a note to clients on Tuesday.

Equity futures begin trading before polls in most states have closed. Some races may not be called until later this week, and others could go to a run-off, including a key Senate race in Georgia.

Even once results are clear and policy priorities are laid out, investors should still keep time as a key variable in making decisions around politics, Goodwin added.

"More often than not, policy impacts markets indirectly and over a medium- or long-term time horizon. Take the recently passed Inflation Reduction Act; the implications for the inputs to infrastructure construction may be clear, but externalities of any technological advancement, process challenges, and other impacts are far from certain," Goodwin said.

— Jesse Pound

Disney shares fall after earnings miss

Bob Chapek, Chief Executive Officer of Disney, speaks at the 2022 Disney Legends Awards during Disney's D23 Expo in Anaheim, California, September 9, 2022.
Mario Anzuoni | Reuters

Shares of Disney fell more than 6% in extended trading after the company's fiscal fourth quarter report missed Wall Street estimates on the top and bottom lines.

Disney's disappointing results came despite stronger-than-expected growth in its streaming video business.

Here's a look at the key numbers:

  • Earnings per share: 30 cents per share adj. vs 55 cents expected, according to a Refinitiv survey of analysts
  • Revenue: $20.15 billion vs $21.24 billion expected, according to Refinitiv
  • Disney+ total subscriptions: 164.2 million vs 160.45 million expected, according to StreetAccount

Disney reported a loss of more than $1.4 billion in its direct-to-consumer division for the quarter. During the pandemic, investors cheered subscriber growth but have grown more skeptical as interest rates have risen and the slowdown of Netflix's growth led to questions about how big the streaming market will be.

— Jesse Pound, Sarah Whitten

Pennsylvania, Georgia and Nevada's Senate races are in focus, Cowen says

Cowen Washington Research Group's Chris Krueger said investors should focus on the big Senate races in Pennsylvania, Georgia and Nevada tonight, and the party that wins two-thirds of these states will likely take the majority.

The research firm's base case is for the Republican party to seize control of both the House and Senate. Krueger said a divided government means no new taxes for the next two years, as well as no more fiscal stimulus.

Cowen believes that numerous races will take days to count mail-in ballots.

— Yun Li

Stock futures open little changed

Stock futures were calm at 6 p.m. ET after three straight positive days for Wall Street. Dow futures dipped about 50 points, or less than 0.2%, while S&P 500 and Nasdaq 100 futures hovered near the flatline.

Some polls in the U.S. have now closed, but it will likely be several hours at least until investors get clarity on key midterm races.

— Jesse Pound

Dow is following a historical pattern of bullish trading

The blue-chip Dow has gained in the four trading days in the run-up to Tuesday's midterm elections, following a short-term positive trading pattern.

According to the Stock Trader's Almanac, the Dow has consistently risen before and after midterm elections for nearly 90 years.

"An impressive 2.8% has been the average gain during the eight trading days surrounding midterm election days since 1934. This is equivalent to roughly 966 Dow points per day at present levels," the Almanac says.

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— Jesse Pound

Watch the ‘Republican portfolio’ names including energy stocks

Strategas Research says the stock market is signaling that Republicans may sweep the election. The firm constructed portfolios that should do better or worse depending which party has control.

Its Republican portfolio, which contains stocks from sectors like energy, as well as police and immigration enforcement firms, has outperformed and was signaling 75% odds of a GOP sweep as of Monday's close.

Some of the companies in the Strategas Republican portfolio are Axon Enterprise, Johnson & JohnsonThe Williams CosHuntington Ingalls IndustriesConocoPhillips and OSI Systems.

Strategas also notes that gridlock would result in less spending, and therefore a less inflationary environment. So iShares 1-3 Year Treasury ETF (SHY) is in its Republican portfolio. Yields move opposite prices, so bond yields should fall in a less inflationary environment.

— Patti Domm

S&P 500 usually gains big in year after midterms — even in a recession

History shows the stock market typically rises the year after midterm elections — even with a recession.

The year following midterms has historically been a strong one for the S&P 500, with the benchmark gaining 20.1% on average, according to Citigroup data going back to 1960.

Even when there's a recession the next year, returns are surprisingly robust, with the S&P 500 rising 24.4% on average during three instances in 1974, 1990 and 2006, Citi said. That's especially pertinent now, with many economists expecting an economic downturn in 2023 in the wake of the Federal Reserve's aggressive rate hikes to tame inflation.

— Yun Li