US midterm elections: counting could take weeks, but Wall Street remains calm
According to MarketWatch, economic uncertainty, not politics, is what drives stocks, while historical data from CNBC shows average gains after the election.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MARKETWATCH · 2 MIN
The US midterm elections will be held on Tuesday, November 3, but the outcome may take time to become clear. According to MarketWatch, counting the midterm elections could take weeks, a long time for those who follow the market on a daily basis. Even so, the predominant reading on Wall Street is that the delay does not worry investors.
The backdrop is one of moderate caution. According to Money Times, the S&P 500 closed the previous week with a balance of -0.6%, amid position adjustments. A source cited by MarketWatch says that only economic uncertainty, not political uncertainty, drives the stock market.
History helps provide context. In an analysis by CNBC covering the period from 1980 to 2024, the S&P 500 rose an average of 0.2% the day after the election and had an average increase of 1.1% in the month of the vote, including presidential and midterms. One year later, the average was +13.7% after the midterms and +13.8% after the presidential ones, with positive 1-year returns in 91% of cases.
According to the Money Times, the S&P 500 rose after all 11 midterms held between 1982 and 2022. The data is consistent with the CNBC series, but only deals with one midterm election cycle, with a small sample.
The main point of friction is political. According to Bloomberg, Trump said he could become “Mr. Veto» if the Democrats win the midterms, that is, they would start using the veto power to block projects approved by Congress. For those who defend fiscal responsibility and free markets, the central question is whether this type of brake helps contain spending and taxes.
What changes for the investor
The data cited shows that the S&P 500 used to rise after the elections, but this does not guarantee that the pattern will be repeated in this cycle. Those who operate Nasdaq, interest rates or the dollar tend to give more weight to economic uncertainty than to the electoral score, which is precisely the factor pointed out by the MarketWatch source. A slow calculation may cause short-term fluctuations, but the available numbers do not, in themselves, indicate the direction of prices.
Automatically translated from Portuguese.
