Three Things to Watch
- Voters head to the polls on Tuesday with no clear idea of what will happen. The Republican Party is expected to lose its narrow majority in the House, while the Senate (currently 53-47 Republican) is expected to be more competitive. A shift in control of Congress would have broad ramifications with gridlock likely prevailing and increases in impeachment rhetoric and executive orders. It would also likely muddy the outlook for a resolution to the conflict with Iran.
- After the election, the focus will turn to Friday’s October employment report. The jobs numbers have been softening but remain positive, and more of the same is expected with nonfarm payrolls forecast up 60,000 and the unemployment rate remaining unchanged at 4.2%. That would do little in terms of U.S. Federal Reserve policy.
- Earnings will continue to roll in with Apple, Palantir, AMD, McDonald’s and Uber all on the tapes. Of the 301 S&P 500 members that have reported, 83% have posted a positive earnings surprise with the industrial and health care sectors outperforming expectations the most.
Three Things to Know
- November is the best month of the year on average for equities since 1950, second best in the past 20 years, the best in past 10 years, and the second best in midterm years. (Source: Ryan Detrick)
- The S&P 500 Equal-Weight Index outperformed the S&P 500 by 5.7 percentage points in October, its largest monthly outperformance since April 2009. This also marked its second-largest monthly outperformance since the 1990s. The Equal-Weight Index surged 4.8% in October, while the S&P 500 fell -0.9%. Year-to-date, the Equal-Weight Index has gained 13.9%, exceeding the S&P 500’s 10.7% return as technology stocks lag the broader market. Meanwhile, the S&P 500 ex-AI Index has jumped 14.2% year-to-date, reaching a new all-time high on Friday. (Source: The Kobeissi Letter)
- Scenarios where one party lost control of the political trifecta (holding the presidency and majorities in the House and Senate) saw material underperformance in the six months after midterms (10.4%) compared to when control was gained or Congress remained divided (16.1%). Thus, the market has still rallied, but it was likely hampered in part by the market repricing the expected ability of the government to pass legislation. (Source: BlackRock)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.
6077524 – EXP: 11/30/2029