The midterm elections sent the stock market lower Wednesday as uncertainty about the elections themselves — not control of Congress — weighed on investors. Oil stocks plummeted and Facebook parent Meta Platforms was one of the few bright spots in the technology sector.
The Dow Jones Industrial Average closed 2% lower and the S&P 500 lost 2.1%. The Nasdaq composite plunged 2.5%. The small-cap Russell 2000 index closed down 2.7%.
Volume fell on both the NYSE and the Nasdaq vs. the same time on Tuesday, according to early data.
The yield on the benchmark 10-year Treasury note rose 2 basis points to 4.15%. Crude oil prices fell 3.7% to $85.62 per barrel.
Republicans Win House But Senate Still Undecided
With several important races still undecided, Republicans appeared poised to land a narrow majority in the U.S. House of Representatives. However, the election results have fallen well below GOP expectations of a "red wave" bringing majorities to both chambers in Congress. Control of the Senate is still too close to call.
"The main takeaway from election results currently is likely a mixed government," said George Smith, portfolio strategist for LPL Financial. "Assuming Republicans take the House, we believe it would be a market-friendly outcome no matter what happens in the Senate. Markets don't react well to uncertainly so political gridlock is normally a favorable outcome as new measures from the administration are thwarted by the opposing party."
Perhaps more important for investors is Thursday morning's consumer price index (CPI) report. Econoday's consensus is forecasting an 8% jump in October prices on an annual basis, with core prices climbing 6.6%.
All 11 S&P sectors closed lower Wednesday, with the S&P Energy Select Sector ETF leading the declines, down 4.8%. The S&P Technology Select Sector ETF and Consumer Discretionary Sector ETF added to losses.
Big oil stocks closed sharply lower, with Exxon Mobil dropping 4.5%, ConocoPhillips sliding 6.8% and Chevron down 4%.
Stock Market Movers: Disney, Facebook, Oil Stocks
Dow Jones component Walt Disney dived 13% on a surprise earnings miss. Disney earnings were expected to jump 48% to 56 cents per share on revenue of $21.3 billion. Instead, the company's earnings fell to 30 cents per share on sales of $20.5 billion.
Meta Platforms rallied 5% after it announced it would lay off about 13% of its workforce, and narrowed its 2023 revenue outlook to between $34 billion and $37 billion, vs. earlier estimates of $34 billion to $39 billion.
Wendy's stock led a junk food rally after earnings beat expectations. The fast-food company reported earnings per share of 24 cents on $50.5 million in sales, up from 18 cents last year. Analysts surveyed by FactSet had expected adjusted earnings per share of 23 cents.
Performance Food Group broke out of a cup with handle as the distributor for the food service industry climbed above a 53.58 buy point. Before the opening bell, the company reported 151% earnings growth and a 42% sales surge, according to MarketSmith.
Trade Desk beat third-quarter earnings and revenue estimates this morning, thanks to growth in internet TV. But the advertising-buying platform gave revenue guidance below expectations. Shares fell 8%.
Earnings Movers: Junk Food Stocks, PFGC, ARRY
Array Technologies rose 13.5% Wednesday after beating Q3 estimates late Tuesday.
Occidental Petroleum posted mixed financial results late Tuesday, missing earnings views while topping revenue estimates. The stock gapped down 9.2% and below the 72.14 buy point of a breakout on Oct. 26.
Digital World Acquisition stock dived 19.7% Wednesday as the special purpose acquisition company took a hit. Tuesday's midterms elections were read by some as a repudiation of candidates backed by former President Donald Trump. Digital World plans to take public Trump's social media company.
The Innovator IBD 50 ETF slid 4.2%, led down by oil stocks and by payment processor Intermex. Intermex sold off over 15% in heavy volume after reporting worse-than-expected Q3 sales numbers. The stock has triggered multiple sell signals.
Electric-vehicle giant Tesla traded down 7.2% Wednesday. Dow Jones tech leaders Apple and Microsoft both closed lower, down 3.3% and 1.9%, respectively.
Follow Michael Molinski on Twitter @IMmolinski
