Midterms May Mean More Gains for Stocks

Tuesday September 2nd Weekly Market Update

With the midterm elections now just two months away and campaigning starting to heat up, we thought we would share our current views on the political landscape and what it may mean for U.S equities. In our two publications for this year, we posited that the U.S. economy and corporate profits may drive the stock market higher and investors could turn their attention away from policymakers in Washington, who were such a distraction in 2013 and earlier in the current economic expansion.

We continue to see opportunities for further stock market gains over the course of 2014, as discussed in our Mid-Year Outlook 2014: Investor’s Almanac Field Notes, based upon fundamentals rather than the potential for sweeping legislative change. Although our analysis of stock market performance around midterm elections is very supportive of our positive stock market outlook, it is not a key driver of that outlook.

This Election’s Impact May Be Smaller Than Usual

We do not expect politics to have a big impact on the stock market this fall for two reasons:

1) There is not much uncertainty for the elections to remove.

2) Divided government will likely persist no matter the election outcome

For the full article: Midterms May Mean More Gains for Stocks