#RedWave? #VoteBlue? Wall Street saw green on this midterm Election Day.
Stocks ended Tuesday with solid gains, extending Wall Street’s winning streak to a third straight day.
Stocks first took off Friday after the jobs report showed solid gains in payrolls but also a slight uptick in the unemployment rate. That led to increased hopes that the Federal Reserve might soon be able to pull back on the size of its interest rate hikes.
But this week’s rally seems to be mostly about politics. Investors are betting that Republicans will gain ground in the House and Senate and possibly even win control of both chambers of Congress.
If that were to happen, President Biden and the rest of the Democrats will be faced with a divided government. That could lead to more gridlock, which Wall Street often cheers.
Still, stocks have historically tended to rally following elections no matter who is in power, or whether the White House and Congress are controlled by the same party.
Truth be told, corporate earnings, economic data and interest rates matter more to Wall Street than politics.