Stocks gain for third straight day, Dow up 400 points as investors await midterm election results

Here's what investors need to know about the midterm elections

Stocks rose on Tuesday as investors awaited the outcome of the U.S. midterm elections, which could affect future levels of government spending and regulation.

The Dow Jones Industrial Average rose 408 points, or 1.3%, on track for a third straight day of gains. The S&P 500 rose 1%. The Nasdaq Composite rose 1.2%.

The day before, all major indexes posted their second consecutive gain. The Dow Jones Industrial Average closed up 423.78 points, or 1.31 percent. Meanwhile, the S&P 500 gained 0.96% and the Nasdaq Composite gained 0.85%.

Market participants expect Republicans to take back the House of Representatives and possibly win the Senate when the results begin Tuesday night. Investors tend to like Washington’s concept of gridlock because it limits government spending, new taxes and regulations.

“If we get stuck, that’s probably the best thing that can happen to the market. The market usually does well when that happens,” said Fortune Alliance’s Seskhan.

Overall, history has shown that markets tend to rise at the end of the year and up to 12 months after midterm elections as investors breathe a sigh of relief over some clarity on future policy. One wild card would be if multiple games of congressional control are determined to be too close to predict, an outcome that could weigh on markets on Wednesday.

“Financial markets’ reaction to a GOP victory should be muted, as the outcome of the House, which is already widely expected to have less impact on policy outcomes if Republicans control the House,” Goldman Sachs’ Jan Hatzius wrote in a note on Monday .

“A surprise Democratic victory in the House and Senate could weigh on the stock market as market participants may expect a further increase in corporate taxes,” Hatzius added.

of shares Lyft fell nearly 20%, while two people interact and TripAdvisor Shares fell more than 18% each after reporting disappointing quarterly results.

Meanwhile, Kohl’s shares rose more than 7% after the department store chain announced its chief executive would be leaving next month.

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