Investors ready for possible shake-up in Congress as Election Day arrives
SPY•Investors are weighing how a possible shift in congressional control could affect markets, including AI investment, fiscal negotiations and regulation. S&P 500 options imply a roughly 0.8% move in either direction on Wednesday.
1. Election uncertainty
Investors are assessing the market implications of Tuesday’s midterm elections, with polls suggesting Democrats are likely to take the House while control of the Senate remains uncertain. UBS strategists assigned a 50% probability to a Democratic sweep, 40% to Democrats winning the House while Republicans retain the Senate, and 10% to Republicans retaining both chambers.
2. Potential policy effects
A Democratic-led Congress could increase oversight of the administration, complicate fiscal negotiations and scrutinize AI companies, including over public opposition to data centers. Strategists said a change in control could affect areas including data-center investment, defense spending, and healthcare, banking and cryptocurrency regulation.
3. Options pricing
S&P 500 options were priced for a move of about 0.8% in either direction on Wednesday, compared with an implied average daily move of 0.6% over the past month. Since 1970, the S&P 500 has gained in every six-month period following midterm elections, Edward Jones said.
