Stocks drop amid election uncertainty, Fed decision

The S&P 500 notched a seventh consecutive day of losses Wednesday as worries over the presidential election and weaker oil prices shook investor confidence.

The Fed's decision to keep rates steady, announced at 2 p.m. ET, did not lift stocks out of negative territory.

Of the three major indexes, the Nasdaq dropped the most, down 0.9% for the day. The S&P 500 and Dow Jones industrial average lost 0.7% and 0.4%, respectively. It was a 77-point loss for the Dow.

The Fed, in its statement, said that the "case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives" of stronger economic growth and inflation rising towards its 2% mandate.

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Like most of the public, investors have their eyes glued to the presidential race, as polls between Hillary Clinton and Donald Trump have tightened. The narrowing in the race has brought more uncertainty. Gold and bond prices have risen. The VIX, a volatility measure dubbed the “fear gauge” for Wall Street, jumped 14% on Tuesday to its highest level since June. It was up another 1% early Wednesday.

The Mexican peso, which has become a de facto proxy for Trump’s chances to win the election, has fallen steadily against the U.S. dollar since Friday. Investors expect that Mexico’s economy would be negatively impacted by a Trump administration.

“The lead-up to the U.S. presidential election was always expected to be lively but the events of the last couple of days has seriously taken its toll on investor sentiment,” said Craig Erlam, senior marketanalyst at OANDA.

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Aside from the election cliffhanger, the Federal Reserve wrapped up a two-day meeting on Wednesday. With the election just six days away, the Fed will likely keep a low profile to try to ensure it doesn’t become part of the debate at the close of a tumultuous political campaign. As a result, it’s expected to keep interest rates unchanged , though it may signal in its policy statement that a rate hike is likely at the next meeting in mid-December, as many expect.

U.S. benchmark crude oil lost $1.54 to $45.13 a barrel in New York.

The dollar fell to 103.26 yen from 103.97 yen, while the euro rose to $1.1098 from $1.1062. The yield on the 10-year Treasury note fell to 1.81% from 1.83% the day before.

In Europe, Germany’s DAX dropped 1.3% while the CAC 40 of France lost 1.1%. Britain’s FTSE 100 lost 0.9%.

Japan’s Nikkei 225 index fell 1.8% as the yen rose against the U.S. dollar. The Hang Seng of Hong Kong dropped 1.5% and South Korea’s Kospi dropped 1.4%. Te Shanghai Composite lost 0.6%.