Stocks started the week higher as midterms, CPI reports loom

US stocks pushed forward Monday as investors geared up for another week of potentially market-moving events: November 8 midterm elections and October consumer price data.

S&P 500 (^ GSPC) rallied 1%, while the Dow Jones Industrial Average (^ DJI) jumped more than 400 points, or roughly 1.3%. The tech-heavy Nasdaq Composite (^ IXIC) gained about 0.9% after the index posted its worst weekly decline since January.

A batch of downbeat corporate news has renewed focus on wreck across technology stocks after last week’s disappointing earnings dragged down the sector’s heaviest hitters – Apple (AAPL), Amazon.com (AMZN), and characters (Google) – if the loss is more than 10% each.

apple (AAPL) reversed losses of more than 1% to close higher after the company said in a statement Sunday that it expected fewer shipments of its latest premium iPhones. than anticipatedciting the COVID lockdowns in China that have disrupted operations at the factory of the largest smartphone manufacturer Foxconn.

Also among the tech giants, Facebook’s parent Meta (map), the current worst performer in the S&P 500 index this year, large-scale layoffs are expected to begin this week, according to one report from the Wall Street Journal on Sunday. Shares rose 6.5%.

Elsewhere in the market, Carvana (CVNA) shares fell almost 16% after analysts at Morgan Stanley last week said car retailers can be as little as $1.

The Facebook logo is seen on an iPhone mobile device in this illustration photo in Warsaw, Poland on October 12, 2022. (Photo by STR/NurPhoto via Getty Images)

The Facebook logo is seen on an iPhone mobile device in this illustration photo in Warsaw, Poland on October 12, 2022. (Photo by STR/NurPhoto via Getty Images)

Election Day can keep investors on edge as dozens of key races determine which political party has control over the congressional agenda. Wall Street has historically favored a divided Congress or a White House, with gridlock making it difficult to implement potentially unfavorable legislation.

“Going back to 1929 and excluding the Great Depression, some of the best annual returns for the S&P 500 have been seen when a sitting president did not have full control over both sides of Congress,” Verdence Capital Advisors CIO Megan Horneman and CEO Leo Kelly said in an emailed commentary. “This may be because markets do not expect major changes to the law and Congress is divided.”

While the political campaign has put fiscal leadership in the spotlight, some strategists argue that midterm results rarely affect the financial market outside of short-term volatility.

“Markets are influenced more by financial conditions and expected economic catalysts than by the midterm elections,” said Morningstar’s Chief U.S. Market Strategist Dave Sekera in a recent record. “Historically, some analysis has shown that the equity market tends to underperform in the runup to midterms and then outperform thereafter.”

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, United States, November 2, 2022. US stocks fell sharply on Wednesday as Federal Reserve Chairman Jerome Powell's latest statement pushed back against the idea.  of the policy pivot in the future.  The Dow Jones Industrial Average dipped 505.44 points, or 1.55 percent, to 32,147.76.  The S&P 500 fell 96.41 points, or 2.50 percent, to 3,759.69.  The Nasdaq Composite Index shed 366.05 points, or 3.36 percent, to 10,524.80.  (Photo by Michael Nagle/Xinhua via Getty Images)

Traders work on the floor of the New York Stock Exchange NYSE in New York, the United States, on November 2, 2022. (Photo by Michael Nagle/Xinhua via Getty Images)

October’s Consumer Price Index (CPI) out Thursday, however, is sure to sway the equity market. Another hot inflation reading maybe solidify expectations that the Federal Reserve will raise its key interest rate more than the first forecast.

Economists surveyed by Bloomberg saw the headline CPI at an annual 7.9% for the month, a moderation from September’s year-over-year increase of 8.2%. Core CPI, which strips out the volatile food and energy components of the measure, is expected to come in at 6.5%, little changed from 6.6% last month.

“Headline inflation is likely to peak, but core inflation hit its post-pandemic high just last month,” Baird Investment Strategy analyst Ross Mayfield said in an emailed note. “While the Fed has hinted that they see reason to slow their rate, the rate of inflation – although it has peaked – remains far too high for comfort.”

“Until the Fed indicates that a ‘pivot’ is imminent, things could remain challenging,” he added.

Alexandra Semenova is a reporter for Yahoo Finance. Follow him on Twitter @alexandraandnyc

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