U.S. futures falter as midterms return Mixed verdict: Markets close

(Bloomberg) – U.S. stock index futures fluctuated between gains and losses as corporate performance showed signs of stress and the midterm election failed to deliver the Republican sweep investors had been hoping for. intended.

Bloomberg’s Most Read

December contracts on the Nasdaq 100 and S&P 500 indices were little changed, a day after U.S. stocks capped a three-day rally. News Corp. and Walt Disney Co. each fell at least 8% in premarket trading in New York after posting disappointing results. A cryptocurrency selloff deepened, sending Bitcoin into the biggest four-day slump since June. Oil slid on sluggish demand prospects from China.

Stock and bond investors had hoped for a Republican return to Congress, with the best outcome being GOP control of both the House of Representatives and the Senate. But American voters delivered a mixed verdict, with Republicans heading for control of the House with narrower-than-expected margins and the race for the Senate still wide open. That left Thursday’s inflation report the next catalyst for markets.

“The Republican goal of controlling both houses hangs by a thread,” wrote Chris Beauchamp, chief market analyst at IG Group in London, in a note. “A divided House might mean partisan battles over spending and the debt ceiling aren’t as dramatic or vitriolic, but it’s unlikely to shed much light on the political outlook. Instead, the focus will likely return to the Federal Reserve and the US economy.

Republicans have made progress in their drive to take control of Congress, but many of the closest races have yet to be called. The final outcome may not be known for days or even weeks if the results are as close as polls have suggested and losers dispute the results.

The story continues

Optimism for equities was helped by a track record of strong performance after the midterm results. Stocks have tended to thrive during times when government is constrained and polls suggest Republicans could make gains, putting a damper on Democratic policies.

News Corp. plunged 9.3% in premarket trading after reporting first-quarter adjusted earnings below analysts’ average estimate. Walt Disney lost 8% due to missed quarterly results across the board.

Of the 452 S&P 500 companies that have reported earnings so far this season, 110 have missed analysts’ forecasts. Meanwhile, the gauge’s 12-month blended forward estimates of corporate earnings have fallen 2.7% since mid-September.

Treasuries fluctuated between gains and losses on Wednesday. The dollar halted a three-day slide and posted a modest gain.

In Europe, the benchmark for equities fell for the first time in four days, led by shares in the travel and automotive industry. Chinese developers jumped the most in eight months as a regulator expanded financial support for the sector.

Cryptocurrencies slid further as the potential takeover by Binance Holdings Ltd. of struggling rival exchange FTX.com has highlighted how tensions in the digital asset industry are rocking some of its key players. Bitcoin traded up to 7.7% lower.

Thursday’s Consumer Price Index data could be the next event risk for the Fed’s key rate and comes after core consumer prices rose more than expected to hit a high of 40 years in September. Even though prices are starting to moderate, the CPI is well above the central bank’s comfort zone.

“The market will continue to focus on inflation, which will remain high and sticky for at least the next two quarters,” said Luke Barrs, global head of fundamental equity client portfolio management at Goldman Sachs Asset Management, on Bloomberg Television. .

Key events this week:

• EIA Petroleum Inventory Report, Wednesday

• U.S. Wholesale Stocks, MBA Mortgage Applications, Wednesday

• Fed officials John Williams and Tom Barkin speak at events on Wednesday

• US CPI, US initial jobless claims, Thursday

• Fed officials Lorie Logan, Esther George and Loretta Mester speak at events on Thursday

• American University of Michigan Consumer Sentiment Friday

Some of the major movements in the markets:

Shares

• S&P 500 futures were little changed at 6:21 a.m. PT

• Nasdaq 100 futures are little changed

• Dow Jones Industrial Average futures fell 0.2%

• The Stoxx Europe 600 fell 0.4%

• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.1% to $1.0060

• The British pound fell 0.7% to $1.1466

• The Japanese yen was little changed at 145.62 per dollar

Cryptocurrencies

• Bitcoin fell 4.6% to $17,835.44

• Ether fell 9% to $1,215.75

Obligations

• The yield on 10-year Treasury bills rose one basis point to 4.13%

• Germany’s 10-year yield fell four basis points to 2.25%

• The UK 10-year yield was little changed at 3.55%

Goods

• West Texas Intermediate crude fell 0.5% to $88.48 a barrel

• Gold futures fell 0.2% to $1,712.50 an ounce

–With help from Vildana Hajric, Muyao Shen and Tassia Sipahutar.

Bloomberg Businessweek’s Most Read

©2022 Bloomberg LP