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Democrats Have a 93% Chance of Retaking at Least One House of Congress on Nov. 3 -- History Says That's Bad News for Stocks
The Motley Fool • • business
Key Points:
- The next four weeks are critical for the U.S. economy and stock market, with key events including the Social Security COLA announcement on October 14, the Federal Reserve meeting on October 28, and the midterm elections on November 3.
- Prediction markets indicate a 65% chance that Democrats will retake both houses of Congress, with a 93% probability they will control at least one house, most likely the House of Representatives.
- Historical data from 1926 to 2023 shows that a Republican president with a divided Congress yields the lowest average annual S&P 500 returns (7.33%), which aligns with the predicted post-election scenario.
- Despite this, a 7.33% return still surpasses long-term returns from bonds, real estate, and commodities, suggesting that stock market investments remain favorable for long-term investors.
- The stock market's resilience is driven more by corporate earnings growth, innovation, and capital returns than by short-term political dynamics, indicating that potential congressional gridlock may only cause temporary market slowdowns.
