How the midterm elections will affect US stocks

• After every midterm election for the past eight decades, the S&P 500 has posted gains during the subsequent calendar year.
• However, after taking a beating over the course of the past few months.
• Goldman Sachs believes that because traders are predicting a win for the Republicans.

United States, stocks typically go up, especially if the government is divided, after the midterm elections.

After every midterm election for the past eight decades, the S&P 500 has posted gains during the subsequent calendar year.

However, after taking a beating over the course of the past few months, will 2022 finally be the year that US financial markets buck that trend?

When the results start to come in, investors anticipate that the Republicans will take control of the House of Representatives, and possibly the Senate as well.

Jan Hatzius, chief economist at the investment bank Goldman Sachs, believes that because traders are predicting a win for the Republicans, the financial markets might have a “muted” reaction if the prediction turns out to be accurate.

Wall Street would prefer a situation in which Washington is paralysed in gridlock, with divided control of both Congress and the presidency, because this would eliminate uncertainty regarding the policies that might be enacted.

High inflation and interest rates are currently the most important factors for the global financial markets, more so than Democrats and Republicans.

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