U.S. stocks fell sharply and the dollar rose on Wednesday as investors awaited both the results of the U.S. midterm elections and key data on consumer prices that could impact the Federal Reserve's policy on interest rates.
A deal for major cryptocurrency exchange FTX collapsed late in the session as bigger rival Binance said it was pulling out, news that heightened concerns about the sector's stability.
Stocks in Europe and on Wall Street fell as the outcome of the midterm elections remained unclear as a better-than-expected showing by Democrats muddied the outlook for fiscal spending and regulation.
"After a few days of positive market performance, the fact that there's some uncertainty about the midterm election outcome is resulting in declines today," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
Average annual S&P 500 returns have been 14% in a split Congress and 13% in a Republican-controlled Congress under a Democratic president, according to data since 1932 analyzed by RBC Capital Markets. That compares with 10% when Democrats controlled both the presidency and Congress.
"The market is going to get what it wants: it's going to get divided government. It means gridlock is the agenda item for the next two years," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
"It's not going to seriously alter spending, but it's also going to block any material increases in spending," he said.
On Wall Street, the Dow Jones Industrial Average (.DJI) fell 1.95%, the S&P 500 (.SPX) slid 2.08% and the Nasdaq Composite (.IXIC) dropped 2.48%.
MSCI's all-country world index (.MIWD00000PUS) shed 1.64% and the pan-European STOXX 600 index (.STOXX) fell 0.30%. Overnight in Asia (.MIAPJ0000PUS) shares had edged up as the election results first rolled in.
