- US stocks moved higher Tuesday as polls opened for the 2022 midterm elections.
- Analysts say a Republican victory would cement expectations of no large policy shifts, boosting stocks.
- Morgan Stanley’s Mike Wilson said the S&P 500 could surge this week in a decisive Republican win.
US stocks climbed Tuesday as voting in the 2022 midterm elections kicked off, with traders bracing for election results that could bring political gridlock should Republicans gain seats in Congress.
Analysts say gridlock could bode well for investors, as a Republican victory would make major policy shifts less likely. That would give more predictability to markets, and the S&P 500 could climb as high as 4,150 this week if the results favor Republican candidates.
“[T]he Republicans have talked about freezing spending via the debt ceiling much like they did in 2011 (the Budget Control Act),” Morgan Stanley’s Mike Wilson wrote in a Monday note to clients. “This would be a sharp reversal from the past few years when budget deficits reached levels not seen since WWII. In our view, a clean sweep by the Republicans on Tuesday could greatly raise the odds of such an outcome.”
Here’s where US indexes stood as the market opened 9:30 a.m. on Tuesday:
- S&P 500: 3,805.65, down 0.03%
- Dow Jones Industrial Average: 32,882.45, up 0.17% (55.45 points)
- Nasdaq Composite: 10,561.76, down 0.03%
Here’s what else is happening:
- The S&P 500 could plunge another 16% and won’t bottom until the Fed starts to cut interest rates, UBS analysts said.
- Russia is sending an ice-breaking tanker of oil to China via the Arctic circle.
- El Salvador said China offered to buy all of its foreign debt as the nation looks to avoid default.
- The Fed may have to hike interest rates above 6% to crush stubborn inflation, according to Larry Summers.
- China’s super-rich have seen billions of dollars wiped from their fortunes amid the economic downturn.
In commodities, bonds, and crypto:
- Oil prices slipped, with West Texas Intermediate down 0.29% to $91.52 a barrel. Brent crude, the international benchmark, inched lower 0.04% to $97.88 a barrel.
- Gold edged lower 0.15% to 1,678.40 per ounce. The 10-year yield ticked lower 2.8 basis points to 4.186%.
- Bitcoin dropped 6.22% to $19,534.01.