S&P 500, Nasdaq Drop 2% After Republicans Advance Failed Short

Barry Adams
09 Nov, 2022
New York City

Stocks on Wall Street fell after midterm elections did not result in the "Red Wave" as expected by Republicans. 

The expected Republican wave failed to materialize and dashed the hopes of a strong Republican majority in the House and significant gains in the Senate. 

With several key races still not final, Republicans are expected to have less than a five-member majority in the House and may not win a majority control of the Senate. 

The future of the Senate may not be decided for a month as the Georgia Senate race moves to a runoff. 

Historically, the party in charge of the House and the Senate suffers losses in midterm elections. 

However, Democratic Party voters appear to be more engaged and showed higher-than-usual election participation, hobbling the efforts of the Republican to gain control of both chambers of legislation. 

Several extreme right candidates promoted by the former president Donald J Trump failed to win, jeopardizing Trump's platform and possible run for the 2024 presidential race.  

The S&P 500 index declined 2.1% to 3,748.57 and the Nasdaq Composite index dropped 2.5% to 10,353.18. 

Crude oil fell $3.10 to $85.81 a barrel and natural gas fell 20 cents to $5.93 a thermal unit. 

Bond market took election results in stride and yields rebounded in the final hour and the market shifted its focus to the upcoming inflation data on Thursday. 

The yield on 2-year Treasury notes declined to 4.58%, 10-year notes eased to 4.10% and 30-year bonds declined to 4.27%. 

 

U.S. Movers 

D R Horton Inc increased 2.6% to $75.19 after the homebuilder reported mixed quarterly results but backlog and unit home prices remained elevated.

In the fiscal fourth quarter ending in September, consolidated revenues increased 19% to $9.6 billion from $8.1 billion a year ago.

Net income in the quarter rose 22% to $1.6 billion from $1.3 billion and diluted earnings per share increased to $4.67 from $3.70 a year ago.

In the quarter, the company repurchased 3.6 million shares of common stock for $251.7 million.

The company's cancellation rate for fiscal 2022 was 21% compared to 17% a year ago and sales order backlog of homes under contract at the end of the quarter dropped 25% to  19,614 homes and 16% in value to $8.0 billion from 26,221 homes and $9.5 billion a year ago.  

Hanesbrands Inc declined 8.6% to $6.48 after the company reported lower-than-expected results.

Net sales in the quarter declined 6.6% to $1.67 billion from $1.79 billion a year ago.

Net income plunged to $80.1 million from $151.8 million and diluted earnings per share dropped to 23 cents from 43 cents a year ago.

The company did not repurchase any shares in the third quarter  and has approximately $575 million remaining under its current repurchase authorization.

The company's board declared a quarterly dividend of 15 cents a share to shareholders on record on November 22 and paid on December 13, 2022.

The company estimated fourth quarter revenue between $1.40 billion and $1.45 billion, including $68 million of foreign exchange losses, representing a 19%revenue decline from a year ago.

Meta Platforms jumped 6.8% to $102.94 after the company said it plans to layoff more than 11,000 workers.

Meta employs about 87.000 around the world and CEO Mark Zuckerberg said in a letter to employees his growth expectations were too high and the company needs to recalibrate its costs.

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