Investors are turning their focus to Tuesday’s U.S. midterm elections, which will determine control of the House and Senate which could spur moves in tech stocks and beyond.
Republicans have picked up momentum in polls and betting markets and analysts see a split government – with the GOP winning the House of Representatives and possibly the Senate.
Traders also appear to be leaning toward a Republican win: a basket of stocks and other assets tracked by advisory firm Strategas that would be expected to do well after a Republican victory have outperformed a counterpart Democrat portfolio, indicating a roughly 70% chance that Republicans win both the House and Senate.
A split government could result in political gridlock that stymies major policy changes, an outcome that investors see as favorable for equities.
It’s unclear whether megacap tech company reform has bipartisan support, according to Citi analysts. Therefore Republican victory in the House or Senate “probably means a legislative standstill, implying an incremental positive for the category,” they said.
The tech-heavy Nasdaq 100 index has fallen by roughly one-third this year.
MacDailyNews Take: Gridlock is good for the market.
With a U.S. federal government several orders of magnitude larger than any founding father’s worst nightmare, anything that locks it in place, even temporarily, is a Good Thing™.
The first polls close at 6pm EST.
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