How have the midterms affected the US stock market?
US stocks have fallen amid tightly contested US midterms that may bring a divided Congress – making it harder for the passage of drastic policy changes.
Republicans have made modest gains and are favored to win control of the House, but control of Congress remains up for grabs with many of the most competitive races uncalled.
A split government, with a Democrat in the White House, has historically been favorable for stock markets as it paves the way for partisan standoffs on contentious policy changes such as the federal debt limit, which could usher in worries of a US default.
“There is a likelihood that we have divided government… the general rule of thumb as far as markets are concerned is gridlock is good – fewer policy changes and less risk to individual sectors,” Art Hogan, chief market strategist at B. Riley Financial, told Reuters.
(Reuters)
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