Stocks waver ahead of midterms, CPI report

US stocks were mixed Monday as investors geared up for another week of potentially market-moving events: the Nov. 8 midterm elections and October consumer price data.

The S&P 500 (^GSPC) advanced 0.1%, while the Dow Jones Industrial Average (^DJI) gained 160 points, or roughly 0.5%. The technology-heavy Nasdaq Composite (^IXIC) lost steam after opening higher, extending losses to slip 0.2% after the index posted its worst weekly decline since January.

A batch of downbeat corporate news has renewed focus on the wreck across technology stocks after disappointing earnings last week dragged the sector’s heaviest hitters — Apple (AAPL), (AMZN), and Alphabet (GOOGL) — to losses of more than 10 % each.

Apple (AAPL) shares slumped more than 1% after the company said in a statement Sunday it expects fewer shipments of its newest premium iPhones than previously anticipated, citing COVID lockdowns in China that dented operations at its biggest smartphone maker Foxconn’s factory.

Also among tech giants, Facebook parent Meta (META), which was down 73% year-to-date as of Friday’s close and is the worst performer in the S&P 500 index this year, is now expected to begin large-scale layoffs this week , according to a report from the Wall Street Journal on Sunday. Shares rose nearly 6%.

Elsewhere in markets, Carvana shares sank 15% to a five-year low after an analyst at Morgan Stanley last week said the car retailer could be worth as little as $1.

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

Election Day may keep investors on the edge as dozens of key races determine which political party has control over the congressional agenda. Wall Street has historically preferred a split Congress or White House, with gridlock making it difficult to implement any 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 the sitting President does not have full control over both sides of Congress,” Verdence Capital Advisors CIO Megan Horneman and CEO Leo Kelly said in emailed commentary. “This may be because markets do not expect major changes to law with a split Congress.”

While political campaigns have placed fiscal leadership into the spotlight, some strategists argue that midterm outcomes rarely influence financial markets outside of short-term volatility.

“The markets are influenced more by expected financial conditions and economic catalysts than by midterm elections,” Morningstar Chief US Market Strategists Dave Sekera said in a recent note. “Historically, some analysis has shown that equity markets have tended 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, the United States, on Nov.  2, 2022. US stocks fell sharply on Wednesday as Federal Reserve Chairman Jerome Powell's latest remarks pushed back against the idea of ​​a policy pivot in the near future.  The Dow Jones Industrial Average dipped 505.44 points, or 1.55 percent, to 32,147.76.  The S&P 500 decreased 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 Nov. 2, 2022. (Photo by Michael Nagle/ Xinhua via Getty Images)

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

Economists surveyed by Bloomberg see 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 projected to come in at 6.5%, little changed from 6.6% last month.

“Headline inflation has likely peaked, 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 reasons to slow their pace, the rate of inflation – even if it has peaked – remains far too high for comfort.”

“Until the Fed signals the ‘pivot’ is near, things could remain challenging,” he added.

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

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