Wall Street Ends Lower As Election Results Unclear

Wall Street ended sharply lower on Wednesday as Republican gains in midterm elections appeared more modest than some expected, with investors also focusing on upcoming inflation data that will provide clues about the severity of future interest rate hikes.

The S&P 500 lost more than two percent, ending at 3,749, the Nasdaq fell almost 2.5 percent, to 10,354, and the Dow Jones dropped 1.95 percent to 32,513.

Republicans were still favored to win control of the House of Representatives but key races were too close to call, with a better-than-expected showing by Democrats diminishing the prospect of a so-called red wave of Republican gains.

"What was really more expected in the market was a red wave," said Jay Hatfield, CEO of Infrastructure Capital Management in New York. "I think we were in a unique situation where the more the Republicans won, the better off the market would have been. At least there would have been some stocks strongly rallying, like defense and energy stocks."

Also hurting sentiment, Walt Disney tumbled 13 percent, its biggest one-day drop since 2001, after the entertainment heavyweight reported more losses from its push into streaming video.

Tesla dropped 7.2 percent to a two-year low after Chief Executive Elon Musk late on Tuesday disclosed that he sold $3.95 billion worth of shares in the electric-vehicle maker days after he closed his $44 billion deal for Twitter.

Wednesday's drop on Wall Street ended a three-day rally in which the S&P 500 had gained almost 3 percent.

With the election outcome still uncertain, investors were turning their attention to October inflation data due out on Thursday, which could shed more light on whether the Fed might soften its aggressive stance on interest rate hikes. (Reuters)