Wall St set to open lower as race for control over Congress tightens

Summary:

• Meta Platforms gains on decision to cut 11,000 jobs
• Disney slumps as losses in streaming unit mount
• Futures off: Dow 0.24%, S&P 0.07%, Nasdaq 0.01%

US stocks were set to open lower on Wednesday as investors kept a close eye on the results from a tightly contested midterm election in expectation of a divided Congress that would make it harder for the passage of drastic policy changes.

Republicans made modest gains and were favored to win control of the House of Representatives, though control of Congress was still up for grabs with many of the most competitive races uncalled, leaving it unclear what the final outcome would be.

A split government, with a Democrat in the White House, has historically been favorable for stock markets as it paves the way for partisan standoffs on contentious policy changes such as the federal debt limit, which could usher in worries of a US default. 

"There is a likelihood that we have divided government... the general rule of thumb as far as markets are concerned is gridlock is good - fewer policy changes and less risk to individual sectors," said Art Hogan, chief market strategist at B. Riley Financial.

A surprise victory for Democrats could raise concerns about tech-sector regulation as well as budget spending that could add to red-hot inflation, according to market strategists.

Investors have increasingly priced in a Republican win this quarter as stocks including energy and defense - expected to perform well under a Republican sweep - have outperformed clean energy shares that typically benefit under a Democratic leadership.

The S&P 500 has posted a gain in every 12-month period after the midterm vote since World War Two, according to Deutsche Bank.

At 8:02 a.m. ET, Dow e-minis 1YMcv1 were down 78 points, or 0.24%, S&P 500 e-minis EScv1 were down 2.75 points, or 0.07%, and Nasdaq 100 e-minis NQcv1 were down 1.5 points, or 0.01%.

Meanwhile, some market participants expect October US inflation data due on Thursday to be more market-moving.

Holger Schmieding, an economist at Berenberg, does not expect election results to have any impact on US fiscal or monetary policies and believes the Federal Reserve's actions to curb inflation will continue to dictate markets.

Among individual stocks, Meta Platforms Inc META.O climbed 5.8% in premarket trading as the Facebook-parent said it would let go of 13% of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year.

Tesla Inc TSLA.O rose 1.5% after filings showed Chief Executive Elon Musk has sold $3.95 billion worth of shares in the electric-vehicle maker days after he closed the $44-billion Twitter deal.

Kroger Co KR.N gained 2.4% after the US federal court denied requests to temporarily block Albertsons Companies Inc's ACI.N $4 billion dividend payment to shareholders.

Separately, Evercore upgraded the grocer's stock to "outperform" from "in line".

Walt Disney Co DIS.N slumped 7.4% the entertainment giant racked up more losses from its push into streaming video.

News Corp NWSA.O dropped 9.6% after the media conglomerate reported downbeat first-quarter revenue and profit.