United States President Donald Trump warns voters that if Democrats do well in congressional elections taking place next week, it could mean big trouble for the stock market. Trump has previously expressed his belief that the stock market is the single biggest predictor of economic health in America.
History has shown that the stock market tends to rise whichever party is in control. However, the market has been observed to perform slightly better when Republicans control Washington.
When data is analyzed for the past 50 years, the stock market has shown a better performance during two year periods in which a Republican president is paired with Republican control of Congress. This fact has many investors hoping for a Republican victory in next week’s elections.
Stephen Massocca, a senior VP at Wedbush Securities, explains that there is a major difference in Donald Trump the human being and the Trump agenda. Massocca goes on to say that the stock market loves the Trump agenda.
The tradition for the Republican Party is to push policies like deregulation and tax cuts which are beneficial to business. The market has risen about 20 percent since Donald Trump was elected as the 45th president of the United States.
Voter polls suggest a strong possibility that the Democratic Party will win control of the House when mid-term elections take place. If poll results prove to be true, this will end a period in which Democrats wielded little to no power in Washington. The polls also predict the Republican Pary to maintain their control of the Senate.
Trump issued his warning to stockholders by way of Twitter on Tuesday. His Tweet essentially warned that voting for Democrats should be done by people who want to watch their stock interests decline in value.
Investors have favored gridlock in the past due to a belief that maintaining a status quo is good for the market. Mike O’Rourke, a marketing strategist working with JonesTrading, says gridlock may not be beneficial to investors in this time period. O’Rourke expresses a belief that present favorable market conditions would not be possible in a gridlocked environment.
Trump is set to further his business and political agenda if his party is able to maintain control of Congress.
On the other hand, Democrats are looking forward to gaining House control. The Democratic party will then use this power to push back against Trump political gains that have occurred over the last two years.