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.
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.
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
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
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 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 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
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 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.
— Sarah Min
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
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.
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 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
These stocks are among the biggest movers in midday trading Wednesday:
For more midday movers, check out our full list here.
— Tanaya Macheel
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
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 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
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 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."
—Carmen Reinicke
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
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 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
There were 12 S&P 500 stocks hitting 52-week lows during Wednesday's market decline.
—Gina Francolla