Takeaways from Israel's inconclusive election

JERUSALEM (AP) — Israelis faced political uncertainty Wednesday after no clear winner appeared to have emerged from a high-turnout election. The path to forming a government is fraught for Prime Minister Benjamin Netanyahu and his main opponent, and another round of elections cannot be ruled out.

The first elections since Hamas' Oct. 7, 2023, attack were seen as a pivotal moment in Israel's history, serving both as a referendum on Netanyahu's nearly unbroken 17-year rule and a choice between different visions for the country's future.

The initial results show a deeply divided electorate with multiple fault lines.

Netanyahu lost support but could remain in office. His main opponent, former military chief Gadi Eisenkot, would most likely have to partner with Arab-led parties to unseat him, a politically costly move that could alienate other opposition factions.

They could also partner with Netanyahu in a broad-based unity government, but that would be seen as a major betrayal by many of their voters after they put his ouster at the heart of their campaigns.

Final, official results are expected on Thursday or Friday, but there will likely be weeks of negotiations before a prime minister is declared — or new elections are called.

Here are the main takeaways:

Initial results show Netanyahu's religious and ultranationalist coalition falling short of a parliamentary majority of 61 seats, after reaching a peak of 68 seats in the previous parliament. Netanyahu's right-wing Likud also appears to have been whittled down from 32 seats to around 27.

That could reflect growing disillusionment with his long rule, anger at his handling of the Oct. 7 attacks and their aftermath, and his support for the exemption of ultra-Orthodox Jews from military service, an intensely divisive issue as the country is embroiled in multiple wars.

But Likud still appears to have emerged as the largest party, putting Netanyahu in the best position to be tasked first with forming a government.

He would need support from at least one opposition party, or several defectors from that side, to rule. Most have promised not to partner with Netanyahu, but the Israeli leader, a savvy political operator, could offer them concessions. He is also likely to argue that a broad-based government under his leadership is preferable to one relying on Arab-led parties — or another round of elections.

He can already claim a victory of sorts by having retained much of his support even after the deadliest security breakdown in Israel's history unfolded on his watch.

Netanyahu “manages to overcome situations that I can’t see anyone else managing to overcome,” said Tamar Hermann, senior research fellow at the Israel Democracy Institute, a Jerusalem think tank. “Politically, he is a magician.”

Initial results indicate that parties opposed to Netanyahu won a parliamentary majority. But they include Arab-led factions that have long been politically sidelined, and which some Jewish-led parties have refused to partner with.

In the face of “a politics of supremacy, racism and exclusion, we are offering a totally different alternative,” Yousef Jabareen, the head of the Arab Joint List, said on X. “The change comes through Jewish-Arab partnership, a true and equal partnership. Nothing more, nothing less.”

Only one Arab party has ever joined an Israeli governing coalition, in 2021, and that government only lasted about 18 months. The level of distrust is far higher after Oct. 7 and the resulting wars. Netanyahu is likely to exploit that by casting any partnership with Arab-led parties as illegitimate or treasonous.

Without the Arabs, Eisenkot and his Jewish allies have no clear path to forming a coalition to unseat Netanyahu, and another round of elections might further weaken their hand.

Tens of thousands of Israelis who flew in for this election may not return for another one, and Netanyahu would stay on as caretaker prime minister, giving him a platform to attack his opponents and try to expand his own coalition.

That leaves the prospect of forming a government with Netanyahu — after a campaign in which they blamed him for the failures surrounding the Oct. 7 attack, portrayed him as a threat to Israel's democratic institutions and highlighted his ongoing corruption trial.

The Arab-led parties represent Palestinians with Israeli citizenship, who make up about 20% of the country’s population. Descendants of Palestinians who remained in Israel after its creation in 1948, they are entitled to vote and serve in parliament.

While they hold senior roles in many sectors of Israeli society, they face discrimination, and many Jewish Israelis view them with suspicion because of their general support for the Palestinian cause.

Surging Arab turnout, driven in part by disgust at Netanyahu's far-right allies, may have delivered a historic victory for Arab-led parties, who could win around 19 seats in the 120-member Knesset.

That would give them significant power in any partnership with Eisenkot — potentially making such an alliance less likely. The opposition might also have to partner with hard-line Arab factions that are even more widely rejected among Jewish Israelis.

“With these numbers — there are too many Arabs to lean on, so to speak,” said Aviv Bushinsky, a political commentator and former Netanyahu adviser. “Israeli society is not ready for it, not before Oct. 7 and certainly not after it.”

The elections were an inflection point for Israel after three years of war. But they also highlighted the same divisions that have roiled the country for decades.

Netanyahu's coalition, made up of ultranationalist and ultra-Orthodox parties, supported strengthening Israel's Jewish character. It pushed for more settlement construction in the occupied West Bank and allowed for military draft exemptions for ultra-Orthodox Jews. It also attempted to push through an overhaul of the country's judiciary in 2023 that drew mass protests.

Eisenkot's camp promoted a vision where Israel's Jewish character lives in harmony with its liberal democratic ideals. It promised honest leadership and accountability for Israel's Oct. 7 failures, vowed to bolster the judiciary and end the military draft exemptions. They also promised to fix Israel's international standing, which has deteriorated because of the Gaza war and settler violence in the West Bank.

The apparently stalemated results suggest Israel's divisions are deeper than ever.

An ultra-Orthodox Jewish man holds his child as he casts his ballot at a school serving as a polling station during Israel's general election in Jerusalem, Tuesday, Oct. 27, 2026. (AP Photo/Ohad Zwigenberg)

Supporters of Israeli lawmaker Mansour Abbas's Raam party applaud and wave party flags after the release of the first exit poll results in Israel's general election, in Sakhnin, Israel, Tuesday, Oct. 27, 2026. (AP Photo/Mahmoud Illean)

Gadi Eisenkot, leader of the Yashar ("Straight") party, waves an Israeli flag onstage following the release of the first exit poll results in Israel's general election in Tel Aviv, Israel, Wednesday, Oct. 28, 2026. (AP Photo/Ariel Schalit)

Israeli Prime Minister Benjamin Netanyahu, accompanied by his wife, Sara, waves to supporters at Likud party headquarters in Jerusalem after the release of the first exit poll results in Israel's general election, Wednesday, Oct. 28, 2026. (AP Photo/Ohad Zwigenberg)

NEW YORK (AP) — The bond market swung, while U.S. stocks held relatively steady after the Federal Reserve decided not to raise its main interest rate to bring down high inflation. The S&P 500 rose 0.3% Wednesday. The Dow Jones Industrial Average added 0.2%, and the Nasdaq composite rose 0.3%. In the bond market, the two-year Treasury yield initially jumped after the Fed held its main interest rate steady. It then reversed course after traders pared expectations for coming hikes to rates. Higher rates can help get high inflation under control, but they can also hurt the economy.

THIS IS A BREAKING NEWS UPDATE. Check back for updates. AP’s earlier story follows below.

NEW YORK (AP) — The bond market swung Wednesday, while U.S. stocks held relatively steady following the Federal Reserve ’s decision not to raise its main interest rate to bring down high inflation. The bond market’s moves indicated traders see less of a chance of hikes to rates in the future that would help ease inflation but could also hurt the economy.

The S&P 500 rose 0.1% after drifting between small gains and losses through the day, both before and after the Fed's decision. The Dow Jones Industrial Average was up 70 points, or 0.1%, as of 3:30 p.m. Eastern time, and the Nasdaq composite was 0.1% lower.

The action was much stronger in the bond market, where the yield on the two-year Treasury initially climbed after the Fed announced its decision to hold rates steady. It got above 4.79% from 4.70% late Tuesday after the Fed said two officials actually wanted to raise the federal funds rate at their meeting, only to get outvoted by their peers.

The central bank last month raised its main interest rate for the first time in three years in hopes of bringing down inflation, which has remained above the Fed’s 2% target for years and has been discouraging Americans broadly.

But the two-year Treasury yield, which closely tracks expectations for Fed action, quickly reversed course. It dropped as low as 4.69% after Fed Chairman Kevin Warsh said the central bank wants to see how conditions play out before making its next move on rates.

He pointed to how rates for loans going to businesses and others across the economy have already climbed recently and how lenders and investors have become “more discerning.” He said the overwhelming judgment among Fed officials at their meeting was that “monetary medicine” is “starting to work some.”

Along with signals that the U.S. economy continues to grow, Warsh said that “broadly, these developments go in the direction” of helping the Fed achieve its two goals of a healthy economy and relatively low inflation.

Traders on Wall Street still see further increases to rates by the Fed as likely, but they pared back bets for how many may come by next summer, according to data from CME Group.

The yield on the 10-year Treasury, which moves on expectations for inflation and economic growth in upcoming years, had its own yo-yo moves following the Fed's meeting but was largely steadier. It rose to 5.04% from 4.99% late Tuesday.

Higher rates push downward on stock prices, which has raised the pressure on companies to deliver growth in profits to counteract that. Several companies rallied Wednesday after joining the list of those beating analysts’ expectations for the summer.

GE HealthCare Technologies jumped 6.4% after delivering both profit and revenue for the summer that surpassed analysts’ expectations. It also raised its forecasts for revenue growth and other financial measures for the full year.

Etsy climbed 6% after its profit for the latest quarter blew past analysts’ forecasts. CEO Kruti Patel Goyal said the online marketplace saw growth in active buyers from prior-year levels for the first time in two years, while its active seller base grew at its fastest rate in two years.

Stocks in the artificial-intelligence industry were also relatively solid. They’ve stabilized this week following big swings on worries that high borrowing costs will undercut the boom in AI data centers largely built with borrowed money.

AI stocks got an additional boost after a major player in the industry, South Korea’s SK Hynix, soared 10.9% in Seoul following its latest profit report. The seller of memory chips said it’s in the midst of a virtuous cycle of rising AI usage, and it expects demand to continue to outpace supply through 2030.

On Wall Street, Micron Technology rose 5.4% and was the strongest force lifting the S&P 500. It also sells memory for computers.

Outside of tech, Wendy’s jumped 14.6% to $7.04 after Trian Fund Management, run by investor Nelson Peltz, offered to buy the chain for $7.35 per share in cash.

That helped offset a drop for Boston Scientific, which fell 4.1% even though the seller of medical devices reported a milder drop in profit for the latest quarter than analysts expected. It gave a forecast for profit in the current quarter that fell short of analysts’ expectations.

Robinhood Markets sank 3.9% after reporting weaker profit and revenue for the latest quarter than analysts expected.

In stock markets abroad, South Korea’s Kospi jumped 6.6% following SK Hynix’s leap. Japan’s Nikkei 225 rose 1.1%, while France’s CAC 40 edged down by less than 0.1%.

AP Writer Elaine Lai contributed to this report.

A screen displays a news conference by Federal Reserve Board Chairman Kevin Warsh on the floor of the New York Stock Exchange, Wednesday, Oct. 28, 2026, in New York. (AP Photo/Yuki Iwamura)

FILE - Traders Joseph Stevens, left, and Robert Arciero work on the floor of the New York Stock Exchange, Monday, Feb. 2, 2026. (AP Photo/Richard Drew, file)

FILE - Trader Daniel Kryger works on the floor of the New York Stock Exchange, Monday, Feb. 2, 2026. (AP Photo/Richard Drew, File)

Employees work near the screens showing the Korea Composite Stock Price Index (KOSPI), the foreign exchange rate between the U.S. dollar and the South Korean won, and the Korea Securities Dealers Automated Quotations at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Oct. 28, 2026. (AP Photo/Lee Jin-man)

A dealer stands near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between the U.S. dollar and the South Korean won in a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Oct. 28, 2026. (AP Photo/Lee Jin-man)

A dealer walks near the screen showing the Korea Composite Stock Price Index (KOSPI) in a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Oct. 28, 2026. (AP Photo/Lee Jin-man)