Stocks Usually Rise When Midterm Election Splits Government: Learn Why
Economists say that if Republicans take control of just one part of Congress, there shouldn't be any big policy changes for the next two years.
"We won't see anything even slightly controversial in this Congress," said
Brad McMillan, chief investment officer
at Commonwealth Financial Network.
"That means we can pretty much be sure that the current fiscal policies will stay in place: no tax cuts and no major spending bills for the next two years."
"No matter how you look at it, this makes a big part of the economic playbook more clear. From a market point of view, this is a good thing."
are frequently interpreted as a vote on the president currently in office as well as the state of the economy.
According to Reuters/Ipsos tracking, approval ratings for the president and the economy have been near 40% lately.
Smith says that if the Republicans win the House, any possible tax hikes, including taxes on corporate buybacks, are probably off the table.
If the U.S. needs to raise the debt ceiling again or goes into a deep
and people want the government to help, negotiations could stall.
"It might get harder to raise the
, and when it looks like the U.S. might not pay its debts, the markets usually react negatively," Smith said.