Stocks traded lower on Wednesday after recent market gains, as the results of the midterm elections did not provide a clear answer on who will control Congress.
The Dow Jones Industrial Average fell 270 points, or about 0.8%. The S&P 500 fell 0.9% and the Nasdaq Composite fell 1.2%.
Stocks rose for three straight days ahead of the election, in which Wall Street expects Republicans to win and block any future tax and spending plans. The Dow rose 333 points on Tuesday, gaining more than 1% for the third straight session.
But congressional control is unclear. Control of the House of Representatives has not yet been predicted by NBC News, which estimates Republicans could win 220 seats, which would be a slim majority.
In one of the key races that could decide control of the Senate, Democrat John Feltman beat Republican Mohamed Oz for a key Pennsylvania Senate seat, according to a forecast from NBC News. Oz has the backing of former President Donald Trump, whose candidates have had mixed success across the country.
Meanwhile, a crucial Senate race is underway in Georgia between Democratic senators. Raphael Warnock and Republican former NFL player Herschel Walker will head to December. 6 Runoff, according to Secretary of State Brad Raffensperger. A key Senate race in Nevada remains unresolved.
“The outcome of the election remains uncertain, but the red wave that models, investors and betting markets expected has not materialized, and in the near term, this will exacerbate already elevated volatility,” Dennis de Boucher said in a Wednesday statement. wrote in a report.
While the election has grabbed the market’s attention, investors may want to move on now as the Fed raises interest rates to bring down inflation, which could tip the economy into recession.
The political landscape “will fascinate Washington’s chattering class, but for markets, the focus will shift to whether a recession is looming, whether the Fed will end its tightening this winter, and whether a truce and negotiation is possible in the Ukraine war,” said AGF Investments chief U.S. Policy strategist Greg Valliere wrote.
The market’s recent rally has occurred at the front end of a strong seasonal period. Stocks have historically tended to rise after midterm elections and the political clarity they bring, and the last two months of the year are considered bullish for investors.
Facebook Parents Share meta platform Shares rose 3% after the social media giant announced it would lay off more than 11,000 employees. Founder and CEO Mark Zuckerberg said he was too optimistic about growth and needed to streamline the company now.
One stock weighing on the market was Disney, which fell more than 11% after the entertainment giant missed revenue and profit estimates in its fiscal fourth quarter.