Before another week of potentially market-moving events, including corporate results, midterm elections, and inflation data, it was the third straight day of advances for the major indices.

Highlights

• Dow Jones Industrial Average crept up 1%.
• S&P 500 increased by 0.6% while Nasdaq Composite increased by 0.5%.
• Earnings season nears a close with stocks fluctuating in response to profit reports.
• Stock prices related to the cryptocurrency industry also dropped precipitously, with Coinbase Global losing 10.8% and Robinhood Markets losing 19%.

Wall Street experienced a new high on Election Day as equities rose on Tuesday for a third straight day. The S&P 500 increased 21.31, or 0.6%, to 3,828.11 while switching between a larger gain and a slight loss in the process. 

The Nasdaq composite increased 51.68 points, while the Dow Jones Industrial Average increased 333.83 points, or 1%, to 33,160.83.

S&P500 Daily Chart

The outcome of the midterm elections on Tuesday, which will determine which party controls the House and Senate for the balance of President Joe Biden’s first term, has investors’ attention. 

Wall Street has historically supported a divided Congress or White House, with the political impasse that may prevent significant policy changes, a result that investors regard as advantageous for stocks.

In a recent poll conducted by analysts, 39% of investors were undecided about whether the upcoming midterm elections in the United States will be a catalyst for the risk markets or a non-event, while 21% anticipated unfavorable repercussions. 

No matter who wins, according to some strategists, midterm results only have a “minimal” impact on the financial markets.

Dow Jones Daily Chart

The 2022 U.S. midterm elections won’t have much of an impact on the foreign exchange markets overall in the foreseeable future. Therefore, rather than any fresh significant fiscal initiatives, markets should continue to take signals from the Fed’s monetary policy decisions. 

The possibility of additional uncertainty surrounding the debt ceiling is one wildcard that needs to be mentioned. 

Upcoming CPI Data

The Thursday release of the October inflation figures will be another topic that will be widely studied this week. Economists predict that the headline CPI would increase at an annual pace of 7.9%, down from 8.2% the previous month. 

Core CPI is much over the Fed’s tolerance level even though the report indicates that prices are beginning to decline.

Some Wall Street banks, including UBS, predict that the United States will see a “hard landing.” In fact, Jerome Powell, the chairman of the Federal Reserve, stated this week that the Fed’s failure to see a decline in inflation has made it more difficult to ensure a “soft landing.”

Jonathan Pingle, chief U.S. Economist at UBS notes that  the US economic boom already appeared to be in jeopardy and the full impact of one of the most rapid rebalancing’s of monetary policy in many decades remain to be seen.

He adds that, with major imbalances lingering in the US economy as a result of the epidemic, we predict 2023 to bring an economic slowdown or correction. The good news is that resolving the tensions, we believe, would set the US economy up for stronger years beyond 2023.

Earnings Reports

On Tuesday, corporate profit reports also kept rolling even as the earnings season comes to a close, with more releases expected today. After the bell, Disney (DIS) disclosed a profit miss, which caused the stock to decline in after-hours trade.

On the other hand, electric vehicle manufacturer Lordstown Motors Corp. (RIDE) reported a larger-than-expected third-quarter loss on Tuesday. Consequently, iPhone manufacturer Foxconn announced that it would invest up to $170 million in the business through the purchase of preferred stock and 18.3% of common shares.

TC Energy Corporation

On Wednesday, before the market opens, TC Energy Corporation is expected to release its earnings. The consensus EPS expectation for the quarter is $0.75 based on analysts’ predictions.

Rivian Automotive, Inc.

Following the closing of the market, Rivian Automotive, Inc. is anticipated to announce earnings. According to experts, the consensus EPS expectation for the quarter is $-1.78. For the same quarter the previous year, the company reported an EPS of $-7.68.

Manulife Financial Corp

Manulife Financial Corp is also expected to release earnings Wednesday with a consensus EPS expectation for the quarter at $0.53. For the same quarter the previous year, the company reported an EPS of $0.6. 

Other Global News

Elsewhere, the world’s largest cryptocurrency company, Binance, has agreed to buy the cryptocurrency exchange for an unknown sum from Sam Bankman- Fried’s FTX and that led to Bitcoin prices declining.

Before recovering to $18,267, down 12.2% from the previous day, Bitcoin briefly fell below $17,500, according to CoinDesk. From $2.18 trillion to $936 billion, the market capitalization of all cryptocurrencies decreased by 57%.

The yield on the 10-year Treasury note increased slightly on bond markets on Tuesday, reaching about 4.2%. In the meantime, the international benchmark for crude oil, Brent, declined for a second day, dropping to $97.71 per barrel. 

After plummeting the most over the previous three trading sessions since 2020, the US dollar index slightly declined.

In corporate news, Elon Musk said on Tuesday that he had sold an additional $3.95 billion worth of Tesla stock, bringing his total sales to almost $20 billion since beginning his $44 billion acquisition offer for Twitter this year.

After an initial sale of $8.5 billion worth of the automaker’s stock in April, the Tesla CEO appeared to assert that he had enough money to close the Twitter deal. “No further TSLA sales planned after today,” he tweeted at the time.

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