Weekly Financial Market Update
November 12, 2018
The mid-term election results dominated news headlines last week. As expected, Democrats took control of the House of Representatives while Republicans maintained control of the Senate.
The S&P 500’s 2.1% gain on the day after the election may have been a signal that investors embraced potential gridlock in Washington. Gridlock would likely reduce the probability that President Trump’s tax cuts will be reversed, but it also makes additional fiscal stimulus less likely which, in turn, could fuel higher inflation and interest rates.
Stocks gave up most of Wednesday’s gains over the next two days. One potential explanation for the brevity of positive sentiment was that investors’ focus returned to the Federal Reserve’s reiterated plan to continue raising interest rates.
Learn about other developments in the financial world last week in our financial update.