Stock market news for November 10, 2022

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Wall Street closed sharply lower on Wednesday, ending a strong three-day rally. Market participants remained apprehensive as no clear picture has emerged so far as to which party will take control of the US Congress, with the midterm election results too close to announce. Weak earnings results also rattled investor sentiment. In addition, market participants are waiting for key data on inflation. The Dow Jones and S&P 500 posted their worst post-election decline in a decade. The Nasdaq Composite recorded its worst post-election decline compared to 2012.

How did the benchmarks work?

The Dow Jones Industrial Average (DJI) fell 2% or 646.89 points to close at 32,513.94. Notably, 29 components of the 30-stock index ended in negative territory while one in green. The tech-heavy Nasdaq Composite ended at 10,353.17, falling 2.5% or 263.02 points due to weak performance in large-cap tech stocks.

The S&P 500 fell 2.1% to end at 3,748.57. All 11 major sectors of the benchmark index closed in negative territory. Materials Selection Sector SPDR (XLB), Financials Selection Sector SPDR (XLF), Technology Selection Sector SPDR (XLK), Consumer Discretionary Selection Sector SPDR (XKY) and the Energy Selection Sector (XLE) SPDR plunged 1.6%, 1.7%, 2.6%, 3.1% and 4.9%, respectively.

The CBOE Volatility Index (VIX), a gauge of fear, rose 2.2% to 26.09. A total of 11.6 billion shares were traded on Wednesday, below the 20-session average of 11.8 billion. The S&P 500 posted 10 new 52-week highs and 16 new 52-week lows. The Nasdaq Composite recorded 69 new 52-week highs and 463 new 52-week lows.

Uncertain results of the midterm elections

The results of the midterm elections to the US Congress have not yet delivered a decisive verdict. So far, Republicans have an advantage in both the House of Representatives and the Senate. However, a red wave expected by election observers is not yet visible. Currently, Democrats control the House of Representatives and have a slim advantage in the Senate.

Wall Street generally likes a divided Congress. Currently, the United States has a Democratic president. A Republican-controlled House or Senate, or both, will likely create a stalemate over future government spending. Lower or zero government spending can lead to lower inflation and lower interest rates.

Markets await CPI data

The Consumer Price Index (CPI) for October will be released on November 10, before the opening bell. Market participants remained nervous ahead of the release of this data as it could determine whether the Fed will continue its aggressive interest rate hike policies or reduce the magnitude of the rate hike. The October CPI data could also indicate whether the terminal interest rate will go beyond 5% and by how much. Investors expect the CPI to drop a little, although it will remain high.

Weak Q3 2022 earnings data

The Walt Disney Co. DIS reported adjusted earnings of $0.30 per share in the fourth quarter of fiscal 2022, missing Zacks’ consensus estimate by 40% and down 18.9% year-on-year on the other. Revenue rose 8.7% year over year to $20.15 billion, but was below the consensus mark of 4.50%.

Occidental Petroleum Corp. OXY reported Q3 2022 earnings of $2.44 per share, lagging Zacks’ consensus estimate of $2.48. Third-quarter earnings were below our estimate of $2.83 per share. However, total revenue was $9,501 million, which exceeded Zacks’ consensus estimate of $9,354 million.

As a result, shares of The Walt Disney and Occidental Petroleum fell 13.2% and 9.2%, respectively. Both stocks currently carry a Zacks rank of No. 3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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