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Wall Street tumbles on midterm uncertainty, ahead of key inflation data

US midterm

US stocks snapped a four-day winning streak as a tight race between parties in the midterm election makes the outcome uncleared, and traders are cautious ahead of the key CPI data that is due for release later today.

While the crypto rout continues to weigh on risk sentiment, a slew of weaker-than-expected company earnings, including Lucid Motors, Roblox and Affirm, dragged on Nasdaq, sending the tech-heavy index down more than 2%.

US 10-year bond yields steadied at 4.10% after the Treasury auction, showing bond traders are still seeing higher rates to come amid a hawkish Fed, supporting the US dollar to regain strength against the other major currencies. Notably, the fear gauge, the CBOE volatility index climbed for the second day, to 26, implying potential wild sessions ahead. It is expected that the US October CPI will cool down to 8.0% from 8.2% in September, any higher figure may reverse the current rebounding trend in risk assets. 

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  • Dow pulls back to the 200-day moving average, near-term support of 32,500 after closing above this level for the last two trading days. The industrial and materials-heavily-weighted index broke above the 200-day MA for the fourth time this year, but it faces challenges to stay above the level. All 11 sectors in the S&P500 finished lower, with energy stocks leading losses, down 4.6%, due to a slump in Occidental’s shares after the oil producer missed earnings expectations. Growth sectors also badly performed as most mega-cap techs fell, with Apple down 3%, and Amazon falling 4%. Disney's shares tumbled 11% after the company missed both EPS and revenue expectations. 
  • Meta Platform’s shares jumped 5% on massive staff layoffs, while Tesla sank 7%, to a fresh 52-week low on news that CEO Elon sold about $4 billion in Tesla shares after the Twitter deal. Mata lays off 13% of its staff, totalling 11,000 workers on Wednesday. CEO Mark Zuckerberg said in a letter to employees “we need to become more capital efficient”.
  • Bitcoin plunged for the second day, down 7%, to a fresh 2-year low of below 17,000, and Solana dived more than 40%, amid the FTX liquidity crisis. The trading firm that provides Solana tokens, Alameda Research is also owned by Sam Bankman-Fried. Ethereum fell by 9%, to under 1,200. Binance is reportedly to walk away from its acquisition of FTX on concerns about the crypto exchange’s credibility. FTX suspended its withdrawal while freezing the platform.
  • Asian equity markets are set to open lower. ASX futures were down 0.74%, Nikkei 225 futures were down 0.40% and Hang Seng Index futures slid 1.72% after the Chinese CPI and PPI both fell short of estimates.
  • Crude oil tumbled further, down 3.6% as the EIA data shows that the US crude inventories are well above estimates. The crude oil stockpile rose by 3.925 million, almost 3 times an estimated 1.36 million during the week that ended on 4 November. The Chinese economic data has also further darkened demand outlooks. 

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