Closing Stock Market SummaryToday's trade had a positive disposition as market participants awaited midterm election results. The stock market's prevailing expectation is that the results will ultimately lead to a legislative gridlock environment that will make it near impossible to approve new tax hikes, large stimulus plans, and stepped-up regulatory pressure.
The latter assumption fueled some bargain-hunting along with reports about how the stock market typically performs well in the 12-month period following a midterm election (average gain of 14.7% since 1950, according to LPL Research).
The stock market took a noticeable turn lower around 1:00 p.m. ET, however, in a move that coincided with cryptocurrencies taking a noticeable turn lower. The cryptocurrency market was extremely volatile today amid reports that FTX was encountering a liquidity crunch. Early selling interest was tempered, though, after Binance said it had signed a letter of intent to acquire FTX.com, pending due diligence, to help cover the liquidity crunch.
Selling pressure picked up again in a big way as the day progressed, triggering concerns about possible margin calls that ostensibly might have precipitated some selling of stocks to cover those margin calls.
Bitcoin and Ethereum were down 11.2% and 16.6%, respectively. The afternoon selling effort took the S&P 500 below the 3,800 level but buyers showed up there and helped get the market back on a winning track.
Treasury yields were a supportive factor for the equity market today. The 10-yr note yield, which tested 4.24% overnight, settled the session at 4.13%. The 2-yr note yield settled at 4.66%. The U.S. Dollar Index was unable to hold an early gain and fell prone to continued selling pressure, dropping 0.4% to 109.64.
For the S&P 500 sectors, Materials (+1.7%) enjoyed a first place spot thanks to earnings-driven gains in DuPont (DD 66.28, +4.54, +7.4%) and Mosaic (MOS 52.89, +2.97, +6.0%). Meanwhile, consumer discretionary (-0.3%) was the lone sector in negative territory.
Semiconductor stocks were a bright spot in the market. The PHLX Semiconductor Index was up %. NVIDIA (NVDA 146.02, +3.01, +2.1%) was a winning standout for the group after The Wall Street Journal reported that it has come up with an alternative chip for its Chinese customers that does not violate U.S. export controls.
D.R. Horton (DHI), Hanesbrands (HBI), Capri Holdings (CPRI), Roblox (RBLX), The Trade Desk (TTD), MSG Entertainment (MSGE), SeaWorld Entertainment (SEAS), Nomad Foods (NOMD), and Olaplex (OLPX) are set to report earnings ahead of Wednesday's open.
Looking ahead to Wednesday, market participants will be digesting the results from the midterm elections and will receive the following economic data:
- 7:00 ET: Weekly MBA Mortgage Index (prior -0.5%)
- 10:00 ET: September Wholesale Inventories (prior 1.3%)
- 10:30 ET: Weekly crude oil inventories (prior -3.12 mln)
Economic data today was limited to the October NFIB Small Business Optimism Index, which came in at 91.3 after the prior reading of 92.1.
Dow Jones Industrial Average: -8.7% YTD
S&P Midcap 400: -14.5% YTD
S&P 500: -19.7% YTD
Russell 2000: -14.5% YTD
Nasdaq Composite: -32.1% YTD