More Inflation and Midterm Election Sends Stocks Markets High

Stock Market Rise

On 7th November 2022 (Monday), stock markets kicked off the trading day with a rise. The most prominent change could be seen in the Dow Jones Industrial Average whose stocks rose by 0.4% i.e. about 138 points.

On the other hand, there was also a 0.3% gain recorded pertaining to the stocks of the S&P 500.

After a massive decline, stocks belonging to Nasdaq Composite rebounded for 0.1% approximately.

Surprisingly Apple Inc. saw its shares’ value decline by 1% subsequently after the company’s announcement that it will be slowing down its mobile manufacturing.

According to Apple Inc., the decision has been taken particularly because China did not ease up Covid restrictions.

There was also a massive decline recorded on Monday wherein the shares’ value of Palantir declined almost by 5%. Palantir’s fall was attributed to the shortfall which resulted in discouraging quarterly results.

However, there are two major reasons attributed to the overall positive sentiment in the stock markets. The sentiment is that the US might be increasing inflation and, on the other hand, midterm elections are nearing.

The biggest seller of second-hand cars namely Carvana though saw a further decline of 21% in its value. Adding Monday’s decline with the year-to-date decline, Carvana’s shares value has dropped alarmingly by

Meta Shares Increase

The value of shares pertaining to Meta, which is owned by Facebook, saw a value increase of 3%. This was particularly because Wall Street Journal noted that Meta will initiate the layoff process by 9th November 2022.

However, investors are currently eyeing the results stemming from the midterm elections. The elections are expected to provide clarity as to which particular political party in the US will lead the Senate.

Senate elections are scheduled to take place on 8th November (Tuesday).

Political Gridlock

Currently, Democrats are holding the reign of power in the House because the majority in the Senate belongs to them.

Lori Calvasina of RBC suggested that investors believe that a ‘gridlock’ might prevail in the upcoming elections.

There is a belief that stock markets are fond of political gridlocks, suggested Calvasina.

Economic Side

As regards the economy, investors believe that 10th November’s data analysis of the consumer price index will determine what is going on in the Federal Reserve.

According to investors, Federal Reserve is likely to reduce inflation but how much reduction is introduced is very important.

In case there is a hot report, then it will be taken as an indication by the investors that a further increase in inflation would not take place.

Reduction in Inflation Has the Potential of Skyrocketing Stocks

According to Sam Stovall, Chief Strategist for CFRA Investment, the consumer price index for October will be published on 10th November. He believes that there could be a modest drop in the rate of inflation.

As a result of the reduction, Stovall is hoping that the reduction will send the stock markets high.