Stock Market Update

[BRIEFING.COM] The stock market had a defensive posture today. Fairly broad based selling had the major averages stuck in negative territory and sporting sizable losses at the close which approximated their worst levels of the session. The disconcerting price action in the cryptocurrency market kept buyers sidelined, along with disappointing quarterly results from Walt Disney (DIS 86.75, -13.15, -13.2%) and a number of growth stocks like Affirm Holdings (AFRM 12.10, -3.54, -22.6%).

Market participants also digested midterm election results today. Some races remain too close to call, yet reports indicate the likely outcome is a split Congress that will lead to a legislative gridlock environment. That would make it near impossible to pass any additional tax hikes or major spending plans, which was the expected outcome going into the election, so there was a sell-the-news component behind today's losses.

The major averages had been clinging to a somewhat narrow trading range, albeit in negative territory, until selling picked up noticeably in the cryptocurrency market and stocks took another leg lower. This followed reports that Binance walked away from a plan to acquire FTX.com. Bitcoin was down 14.0% and Ethereum was down 14.2% around the time the stock market closed.

The specter of margin calls, as crypto prices plunged, undercut the stock market, which is likely to be used as a source of funds to help meet those calls. The S&P 500 fell below 3,800 during today's session and was unable to reclaim a posture above that mark, as bids fell by the wayside in a risk-averse market.

Other factors in play today include some apprehension ahead of the Consumer Price Index for October tomorrow and the dismal 10-yr note auction. 

The high yield of 4.14% at the 10-yr note auction tailed the when-issued yield of 4.106% by nearly four basis points. The bid-to-cover ratio of 2.23 was well below the prior 12-auction average of 2.45% and the indirect takedown of 57.5% was well below the prior 12-auction average of 67.0%.

The 10-yr note yield settled up three basis points to 4.15% and the 2-yr note yield fell two basis points to 4.64%.

The U.S. Dollar Index rose 0.8% to 110.47.

All 11 S&P 500 sectors closed in the red. Utilities (-0.8%) showed the slimmest loss while energy (-4.9%) brought up the rear as oil prices pulled back. WTI crude oil futures fell 3.9% to $85.67/bbl and natural gas futures fell 5.8% to $6.26/mmbtu.

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index fell 0.1% following last week's 0.5% decline
• September Wholesale Inventories rose 0.6% versus a revised 1.4% increase in August (from 1.3%)
• Weekly EIA Crude Oil Inventories showed a build of 3.92 million barrels after last week's draw of 3.12 million barrels

Looking ahead to Thursday, market participants will receive the following economic data:

• 8:30 ET: November CPI (Briefing.com consensus 0.7%; prior 0.4%), Core CPI (Briefing.com consensus 0.5%; prior 0.6%), weekly Initial Claims (Briefing.com consensus 220,000; prior 217,000), and Continuing Claims (prior 1.485 mln)
• 10:30 ET: Weekly natural gas inventories (prior +107 bcf)
• 14:00 ET: October Treasury Budget (prior -$429.70 bln)

Dow Jones Industrial Average: -10.5% YTD
S&P Midcap 400: -16.2% YTD
S&P 500: -21.4% YTD
Russell 2000: -21.6% YTD
Nasdaq Composite: -33.8% YTD