Wall Street hopes for stock market growth after election

According to polls, Democrats could lose control of the U.S. House of Representatives or the Senate. In this case, stocks have a chance to get an additional boost for growth due to the fragmentation of the government, which will have difficulty controlling the economic situation in the market.

Kim Forrest, chief investment officer at Bokeh Capital Partners, said that a divided government could even benefit many, as there would be no more uncertainty over the next two years. As stated by Forrest, business can function only when its participants know the rules of the game. Therefore, if Republicans control the U.S. Congress and the president sides with the Democrats, U.S. companies will know the rules of the game and get certainty.

The third year of the current presidential cycle (i.e., the next year) has showed the strongest growth in stocks since World War II, with the S&P 500 index rising on average by 14% according to Bespoke Investment Group. Overall, S&P 500 has increased 57% of the time in the second year of the election cycle and 83% of the time in the third.

It is also worth adding that throughout its history, the S&P 500 has almost never dropped after the midterm elections.