Stock market news live updates: Stock futures edge lower as election results in...
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Stock market news live updates: Stocks plummet after midterms as Wall Street turns eyes toward inflation data
U.S. stocks plummeted Wednesday after three days of gains, as investors mulled over a mixed verdict from the midterm election results and highly anticipated inflation data looms on the docket.
The S&P 500 (^GSPC) shed over 2%, while the Dow Jones Industrial Average (^DJI) fell by nearly 650 points, or roughly 2%. The technology-heavy Nasdaq Composite (^IXIC) dragged down by almost 2.5%, or 260 points.
Investors’ optimism during stocks' three-day rally was built on expectations that Republicans would gain ground and create gridlock in Washington. But the Republican red wave failed to materialize in the U.S. midterms. Democrats managed to flip a crucial Senate seat, with John Fetterman beating Mehmet Oz in the Pennsylvania race. As of late Wednesday, both House and Senate control remains in the balance.
Georgia's U.S. Senate race, meanwhile, is heading to a runoff, with neither major candidate on track to win a majority of votes.
The year after midterm elections tends to see the highest equity returns, according to LPL Financial.
“Going back to 1951, a Democratic president with a Republican or split congress, the two most likely cases this election, has seen an average S&P 500 Index return of over 17% versus an overall average of just over 12%,” Barry Gilbert, asset allocation strategist at LPL Financial, wrote in a note.
The final outcome of the midterm results may not be known for days or weeks, but Wall Street pros aren’t expecting a big move in markets.
“We expect the impact of the election to tilt the market positive, partly because we’ll have it behind us,” Gilbert added. “As far as markets are concerned, the policy impact is likely to be small, and market participants will continue to be more focused on central bank policy and inflation.”
To that point, investors will turn their attention to Thursday morning's inflation report, as the Bureau of Labor Statistics releases the Consumer Price Index (CPI) for October. Economists surveyed by Bloomberg expect headline CPI at an annual rate of 7.9%, down from 8.2% the month before. Even if the report shows prices starting to moderate, core CPI remains far above the Fed’s comfort zone.
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