The stock market was pleased with President Donald Trump and the Republican Party’s sweeping victors in 2016. It’s also just fine with the results of the 2018 midterm elections, including Democrats taking back the House of Representatives.
The stock market seems just fine with Democrats in charge of the House
Apparently House Speaker Nancy Pelosi does’t sound bad to Wall Street.
Emily Stewart covered business and economics for Vox and wrote the newsletter The Big Squeeze, examining the ways ordinary people are being squeezed under capitalism. Before joining Vox, she worked for TheStreet.
US stocks rallied on Wednesday in the wake of the 2018 midterm elections that saw Democrats gain the majority in the House while Republicans maintained control of the Senate.
The Dow Jones Industrial Average climbed by about 250 points early in the day, or about a 1 percent increase. The S&P 500 and Nasdaq also moved higher by more than 1 percent each.
Stocks have been rallying in recent days after a tumultuous month. October was a rough one on Wall Street, and there was some speculation that investor concerns about the midterms could have something to do with it. (Issues such as trade, earnings, economic growth, and the Federal Reserve likely mattered more.) The stock market historically doesn’t like uncertainty, so not knowing how the 2018 elections were going to turn out rendered some investors a bit wobbly.
But per Wednesday’s market reaction, everything is just fine, and Wall Street is content with the idea of a power divide in Washington.
“Markets typically do well when you have a split Congress,” Todd Jablonski, chief investment officer at Principal Portfolio Strategies, told the Wall Street Journal. “Investors feel comfortable with that; it gives a sense of stability and a sense that change won’t happen too quickly.”
Markets have often been shaky ahead of midterms, but historically, they’ve tended to bounce back. Sam Stovall, the chief investment strategist at the investment research firm CFRA Research, told me recently that in the past 18 midterm election contests, the S&P 500 rose nearly 17 percent from October 31 of the election year to the same date the following year.
To be sure, past performance is not indicative of future results.
Ahead of the midterms, Trump tweeted that people voting for Democrats would lead stocks to go down. That hasn’t been the case, though Tuesday wasn’t a resounding victory for Democrats, either.
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