As investors brace for midterm elections, four experts weigh in on what could happen to markets

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A bout of volatility has taken stocks sharply off their highs over the last month. Investors will be watching the midterm elections on Tuesday for clues as to where the markets will head next.

  • Alli McCartney, managing director at UBS Private Wealth Management, said: “We could absolutely rally after midterms. You have traditionally seen that, and given how much negative sentiment there is right now, however having the lowest misery index, very high levels of consumer confidence, to a certain extent I would expect that.”
  • Stacey Cunningham, president of the New York Stock Exchange, said: “If you look back to 2016, we did see some uncertainty about elections, and the Brexit referendum, and the presidential election, but the market absorbs news much more quickly than it ever did before. Information travels so much faster. So when news comes out, it gets very quickly absorbed by the market, and it had leveled off, and we saw a lot of things that were happening last year that normally the market would have reacted [to], and they hadn’t.”
  • “I think the market will stabilize. Somewhere in here there’s a bottom. I don’t know where, but I think it’s going to happen after midterms, although I don’t think midterms have been a factor in the correction. I think it will be a factor now over the next 10 days, waiting until things to stabilize,” said Barbara Doran, senior portfolio manager at BD8 Capital Partners.
  • Jack Hough, associate editor at Barron’s, said the results from the midterms may ultimately play little role in the markets no matter the outcomes. “I look at history, and I say, what’s happened in the past when we’ve had a Republican president and the Democrats flipped all or a part of Congress. I look at 2006, 1986 and the answers is, a whole lot of nothing. Positive, decent returns over the next year, not much motion on Election Day. I hate to tell people, I think we imagine a bigger connection than there is. One thing that the right and the left can both agree on is they hate me when I tell them that the stock market doesn’t care about your politics.”

Bottom line: Investors are in a kind of wait-and-see mode ahead of the elections, and it’s widely anticipated that the stock market will rally into year-end following the midterms.

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