Democrats Keep Senate – House Still Undecided
After thousands of deciding ballots have been counted and confirmed, several institutions have established that the United States Senate will again be controlled by the Democratic Party. They will hold at least 50 seats following closely fought victories in Nevada and Arizona. The Democrats’ narrow control over the Senate also has a chance to broaden significantly, with Georgia holding a runoff in early December after neither candidate was able to claim over 50% of the votes needed to be elected. With the fate of the Senate seemingly decided, the House of Representatives is still up for grabs. However, the GOP is on track to claim the majority of the seats in the House. The Republican party has a confirmed 212 members sealed, only needing another 6 to have majority control at 218 seats in the House of Representatives. There are only 19 races left undecided as of Sunday night, and 12 of these will be coming from areas in California and Colorado.
As the U.S. midterms are on track to deliver a split congress, investors should understand how this can be translated into the stock market. Currently, as the House is left undecided, markets may react negatively to the uncertainty revolving around which party will gain the upper hand. If the Republican Party does become victorious in the House, this gridlock may lead to opposition toward the current administration, which can eliminate the uncertainty from any new policies that would be enacted by an undivided government. Historically, investors should also note that records between 1950 and 2021 show the S&P performs best with a Democratic President and a Republican congress, growing annually by an average of 16.3%.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.