Major stock indexes rose Monday morning as investors were optimistic about Tuesday's elections, which could break up Democratic control of Congress.
The stock market usually rises following the elections.
The S&P 500 rose to a three-month high, but the tech-laden Nasdaq fell to its lowest point in more than a year.
Democrats hold the presidency, with Joe Biden halfway through his first term, and will likely lose control of the House and Senate in the upcoming mid-term elections.
According to John Lynch, chief investment officer at Comerica Wealth Management, the S&P has risen 15% in the year after a midterm.
Michael Wilson, Morgan Stanley's chief investment officer, wrote that Republicans breaking up Democrats' control in Congress would cause historically high bond yields to fall and send stocks up.
The yield on the 10-year Treasury note was 4.19% on Wednesday, near the highest level since 2007, and a big jump from a year ago.
If Democrats keep their majority, cannabis stocks are poised for a likely surge, while technology stocks will likely benefit from a strong performance from Republicans as it likely hinders any Democrat-led legislation targeting Silicon
Inflation has surged to its highest level in four decades since Biden took office, though it is in part due to a number of factors, including surging global energy and food prices due to Russia. Biden has been criticized for his handling of the economy. A recent survey of 1,400 high net-worth individuals found the economy and inflation to be their primary focus for the upcoming elections, with a majority of respondents favoring Republican policies on those issues.
DeVere Group CEO Nigel Green wrote in a Monday note that he expects to see an impressive rally this time around. There is less uncertainty for businesses because of the lack of sweeping legislative changes.
Markets will likely move a lot when the consumer price index is released. After coming in cooler than expected, last month'sCPI reading sent the index up 800 points, and September's high reading caused the index to have its worst performance of the year.
What stock investors should look out for in the election.
Tech stocks could be adversely affected by mid-term elections.
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