Varied concerns send stocks tumbling
Midterms’ impact, sour profit reports, crypto crash worrying
NEW YORK — Wall Street closed sharply lower, giving back a big chunk of the gains built in a three-day rally running up to Election Day.
The S&P 500 lost 2.1 percent Wednesday. Several sources of disappointment were behind the drop. There’s still uncertainty about whether Tuesday’s elections will result in a divided Congress that would prevent the kinds of economic policies that make Wall Street nervous.
A batch of sour profit reports also hurt, while crypto plunged again amid the industry’s latest crisis of confidence. Looming over all of it is a report scheduled for Thursday, when the U.S. government gives the latest update on inflation.
“This is like a marathon and we’re in the early part of it,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
The Federal Reserve has already hiked its key overnight interest rate up to a range of 3.75 percent to 4 percent, up from virtually zero in March, and a growing number of investors expect it to top 5 percent next year.
Cryptocurrencies have felt some of the worst pain from the Fed’s whiplash move away from the record-low interest rates it instituted during the recession caused by the pandemic. Bitcoin fell even further Wednesday, below $16,900 from its record of nearly $69,000 almost exactly a year ago. It’s down more than 8 percent over the last day.
This latest plunge for crypto, including an 11 percent drop for ethereum, comes amid worries about the financial strength of one of the industry’s biggest trading exchanges,
FTX. A mega player in the industry, Binance, said on Tuesday that it planned to buy its troubled rival to help it manage a crunch where users had been scrambling to pull their money out. But a report on Wednesday from industry website Coindesk suggested Binance may walk away from the deal, which sent crypto prices reeling further.
Stocks of companies embedded in the crypto economy also continued to sink. Robinhood Markets lost another 13.6 percent and is down 31.5 percent so far this week. Coinbase Global fell 9.1 percent to bring its drop for the week to 21.4 percent
Elsewhere on Wall Street, Disney sank 12.5 percent for the largest loss in the S&P 500 after reporting results for the latest quarter that fell well short of analysts’ expectations.