Stocks were lower on Wednesday — following recent market gains — as results of the midterm elections provided no clear answers about who would control Congress yet.
The Dow Jones Industrial Average fell 270 points, or about 0.8%. The S&P 500 shed 0.9%, and the Nasdaq Composite slid 1.2%.
Stocks are coming off three-straight days of gains into the election, where Wall Street was expecting Republicans to gain ground and block any future tax and spending plans. The Dow climbed 333 points on Tuesday for its third-straight session of gaining more than 1%.
But control of Congress was not clear. NBC News was not yet projecting control of the House of Representatives with an NBC estimate suggesting Republicans could win 220 seats, which would be a narrow majority.
In one of the key races that could determine Senate control, Democrat John Fetterman defeated Republican Mehmet Oz for the pivotal Senate seat in Pennsylvania, according to an NBC News projection. Oz had the backing of former President Donald Trump, whose endorsed candidates saw spotty levels of success across the country.
Meanwhile, a pivotal Senate race in Georgia between Democratic Sen. Raphael Warnock and Republican former NFL player Herschel Walker will head to a Dec. 6 runoff, according to Secretary of State Brad Raffensperger. A critical Senate race in Nevada is unresolved.
“Election results are still uncertain, but the red wave that models, investors, and betting markets anticipated did not materialize, and near-term, that will add to already elevated volatility,” Dennis DeBusschere wrote in a Wednesday note.
While the election captivated market attention, investors may want to move on now as the Federal Reserve raises interest rates to bring down inflation, potentially tipping the economy into recession.
The political landscape “will fascinate the Washington chattering class, but for the markets, the focus will shift to whether a recession looms, whether the Fed will end its tightening this winter, and whether a truce and negotiations are possible in the Ukraine war,” wrote Greg Valliere, chief U.S. policy strategist at AGF Investments.
The market’s recent rally occurred at the front end of a strong seasonal period. Historically, stocks tend to rise after midterm elections and the policy clarity it brings, and the final two months of the year are considered a bullish period for investors.
Shares of Facebook parent Meta Platforms rose 3% after the social media giant announced it will be laying off more than 11,000 workers. Founder and CEO Mark Zuckerberg said he was too optimistic about growth and now needs to streamline the company.
One stock that weighed on markets was Disney, which fell more than 11% after the entertainment giant missed estimates on the top and bottom lines for its fiscal fourth quarter.