Dow jumps 400 points – here’s why this is normally a good time for the market

Investing

Major stock indexes rose Monday as investors prove optimistic about U.S. midterm elections Tuesday that could break up Democratic control of Congress—this is why experts expect midterms to be a boon for markets.

wall street road sign
Midterm elections have heralded positive stock market performances in the past. | Image source: Pixabay

The party of the sitting president typically cedes seats in Congress during midterms Inflation has surged to its highest level in four decades since Biden took office in January 2021, though it’s in part due to several factors largely beyond Washington’s control, including surging global energy and food prices due to Russia’s ongoing invasion of Ukraine. Still, Biden’s handling of the economy has sent his approval rate spiraling.

A recent UBS survey of 1,400 high net-worth individuals listed the economy and inflation as their primary focus for midterms , with a majority of respondents favoring Republican policies on those issues.

“Midterm elections have heralded positive stock market performances in the past and we expect to see an impressive rally this time too,” DeVere Group CEO Nigel Green wrote in a Monday note. “This stalemate, while often infuriating for voters, is often good news for stock markets…because a lack of sweeping legislative changes means there is less uncertainty for businesses.”

Thursday’s release of October’s consumer price index, the most commonly cited inflation measure, will likely move markets significantly as well. Last month’s CPI reading sent the Dow up 800 points after coming in cooler than expected, while September’s high reading caused the Dow to have its worst performance of 2022.

This article was first published on forbes.com

Further Reading

What stock investors should watch for in the midterm elections, from cannabis to tech (Fortune)

Midterm elections could boost or hinder energy, tech stocks (Fox Business)