The results of today’s midterm elections will likely have stock market effects from energy companies to cannabis stocks.
- Depending on which party has control of the House of Representatives, certain agendas and incentive programs could be on the line.
- Some polling indicates that Republicans will likely gain control of both the House and Senate, resulting in stalling of President Joe Biden’s current agendas.
- Stocks expected to do well if Republicans win have been outperforming the Democratic counterpart, indicating that investors suspect Republicans will come out on top.
Why it’s news
Republican victory in Congress will result in a split government, likely leading to gridlock on legislation—decreasing the chance of any major legislative changes.
Whichever way the midterm elections go, midterms are typically followed by positive market performances, good news for equity investors—as the S&P 500 has declined more than 20%.
Several areas of the stock market will be under scrutiny as Americans cast their votes. The defense and energy budgets will see changes depending on which party is in power. Defense and security issues will likely see a boost with Republican victory. In the energy budget, clean energy spending especially will come under scrutiny.
Healthcare spending will also likely be affected. Pharmaceutical and biotech stocks will likely do well if there is a Republican victory.
The cannabis industry will likely have friendlier regulations if there is a Democratic victory, especially if more states move toward legalization.
The fate of Big Tech is a little harder to predict. If Republicans take Congress, there will likely be little movement on any tech legislation.
Stansberry Research’s Corey McLoughlin breaks down sectors by party… “The Democratic basket includes renewable-energy stocks, such as First Solar (FSLR), along with health insurers and hospital companies, given the likelihood of legislation to expand Medicare in a Democrat-controlled Congress. It also includes some stocks linked to ongoing support for Ukraine, including American defense contractor AeroVironment (AVAV).
“The Republican portfolio accounts for relatively lower spending and presumed lower inflation, in part by betting on lower short-term Treasury yields. The allocation also has significant exposure to oil and gas companies, like ConocoPhillips (COP) and Enterprise Products Partners (EPD), along with infrastructure names.”