Stocks Falls As Control Of Congress Remains Unclear
2:33 pm Wednesday, November 09th, 2022
The stock market shifted into to retreat mode today as market participants digested the midterm election results. Some disappointing earnings and/or guidance from Walt Disney (DIS) and a number of former growth stock darlings like Roblox (RBLX) and Affirm Holdings (AFRM), along with renewed selling in the cryptocurrency market, is applying added pressure on investor sentiment.
Some midterm races remain too close to call, yet reports indicate the likely outcome is a split Congress that will lead to a legislative gridlock environment. That would make it near impossible to pass any additional tax hikes or major spending plans, which was the expected outcome going into the election, so there is a sell-the-news component behind today’s losses.
That is not the only factor in play, however. Price action in the cryptocurrency market has been a big drag on the stock market today. The major indices took a noticeable turn lower following a CoinDesk report that suggested Binance might not follow through with its plan to buy FTX after it looked at the company’s financials.
Bitcoin and Ethereum are down 8.8% and 12.4%, respectively, which is fueling concerns about margin calls leading to forced selling of stocks to cover those calls. Crypto exposed stocks are among the biggest laggards in the market, including MicroStrategy (MSTR), Robinhood Markets (HOOD), and Coinbase Global (COIN).
The major indices are all sporting losses at midday and have traded with a mostly defensive posture. The S&P 500 is back below the 3,800 level.
Most of the S&P 500 sectors are in negative territory. Energy (-2.7%) is at the bottom of the leaderboard as oil prices pullback. Real estate (+0.7%) sits atop the leaderboard.
Treasury yields aren’t moving up or down much today. The 10-yr note yield is down one basis points to 4.12% and the 2-yr note yield is unchanged at 4.66%. The U.S. Dollar Index is up 0.6% to 110.24.
