As millions of Americans head to the polls today, investors can only watch and await results of the midterm election. The major indices have a weak tone early on, but it’s possible they could bounce around in low-volume trading with so much attention focused elsewhere.
Despite Tuesday’s early softness, the U.S. market appears to be on slightly better footing going into election day, with the S&P 500 (SPX) and the Dow Jones Industrial Average ($DJI) both closing higher in four of the last five sessions. While we’re probably far from out of the woods, the selling pressure that kept coming in waves last month has died down a bit over the last week.
Yesterday saw super-light volume, and the same could hold true today. It seems unlikely that many investors would want to take big new positions with the election returns about to come in.
One question as voting gets underway is how results might hit different sectors. This isn’t a political column, but it can’t be denied that the makeup of Congress sometimes has an impact on corporations and the markets. Some analysts have argued that the current administration and Congress, with their emphasis on de-regulation and tax cuts, might have helped some sectors, while the administration’s tough stance on trade might have hurt others.
Two sectors to consider watching Wednesday after results are known could be financials and biotech, because these two often tend to come under the Congressional microscope. Both sides of the aisle have targeted drug pricing, while past Democratic Congresses have tried to increase bank regulation. The industrial and materials sectors also might be worth a look as there’s recently been a little renewed talk about Washington getting back into the infrastructure game. That was something that sparked interest in early 2017, after the last