Stocks fell in afternoon trading on Wall Street on Wednesday as results continued to come in for midterm elections and it was still too early to tell whether Republicans will win control of one or both houses of Congress.

The S&P 500 slipped 2.8 per cent to 3,748.57. The Dow Jones Industrial Average fell 646.89 points, or 1.95 per cent, to 32,513.94 and the Nasdaq fell 263 points or 2.48 per cent to 10,353.18.

Disney slumped and led the broader communications sector lower after it reported financial results that fell well short of analysts' expectations and issued a weak earnings forecast.

Facebook parent Meta Platforms was a bright spot. It surged after saying it will lay off 11,000 employees, or about 13% of its workforce, as it contends with faltering revenue and broader tech industry woes. The move comes just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk.

Votes from the US midterms are still being counted across the country and Wall Street is waiting to see if the balance of power in Washington shifts. The elections could determine how much is done in the next several years in Washington, and possibly beyond. If Republicans gain control of at least one house of Congress, standoffs with the Democratic White House could stymie progress on legislation.

Inflation, a key concern

Wall Street's main concern remains stubbornly hot inflation and the Federal Reserve's fight against high prices that have been squeezing businesses and consumers. The central bank has been aggressively raising interest rates throughout the year to slow the economy and tame inflation, but the strategy risks going too far and bringing on a recession. Investors have been closely watching economic data for any hints that inflation could be cooling enough for the Fed to consider easing up on its rate increases.

The central bank has said that it might soon pare back the size of its increases, but warned that it may ultimately hike rates higher than expected because of just how stubborn high inflation has been. The Fed has already raised its key overnight rate to a range of 3.75% to 4%, up from virtually zero in March, and more investors are expecting it to top 5% next year.

Investors will get an important update on inflation Thursday when the government releases its report on consumer prices for October. Economists expect the report to show a continued, slight moderation from a peak set during the summer.

Energy prices fell broadly. us crude oil prices fell 2.5% and natural gas prices in the U.S. lost 2.8%. Russia's war against Ukraine continues hanging over the energy market and raising concerns about global supplies of oil and gas.

The latest round of corporate earnings is nearing a close and several companies are moving sharply following their results and forecasts.

Outside of earnings, Bitcoin slumped 7.9% and other digital assets also fell sharply one day after the world's biggest crypto exchange, Binance, said it could potentially buy rival FTX Trading in what would amount to a bailout. Shares of publicly traded companies with heavy exposure to crypto trading were also down sharply. Coinbase fell 7.8% and Robinhood Markets fell 9.2%.

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