Copyright 2022 The Associated Press. All rights reserved.That may be because the midterms often move U.S. politics from one party holding power, to shared power and smaller majorities. Typically less legislation is passed as a result. The 2022 election could prove to be similar as the Democrats held the Presidency, House and Senate going into the midterms.
Also, whatever the outcome, majorities will be slim for either party in both the House and Senate, again suggesting less legislative activity. We may not know the outcome of the Senate until a Georgia runoff on December 6, leaving U.S. politics in limbo for a while longer. Of course, there is still a possibility that the Democrats could retain both the House and Senate, that would mean that the U.S. political process is not in gridlock, and markets may view that as a risk. Historically the markets haven’t had too much bias to which party is in power, but gridlock appears to be a better outcome for the stock market.
People preferring reality to fantasy is good for the market.