By Chloe Aiello
No matter how different Congress may look on Wednesday, the markets ー especially the S&P ー will be up a year from now, Securities America investment adviser John Grace told Cheddar Tuesday.
"Looking at the performance after the midterms, a year later, 78 percent of the time, the market has been up. So it doesn't matter who wins this thing, you know it's not Dems versus Republicans, it's just that the market tends to like midterms and respond favorably in about a year," said Grace, who has 39 years of experience as a finance professional.
Stocks edged up on Tuesday as voters rushed to polling places and investors awaited results of the hotly contested midterms. The S&P 500 (.SPX) gained about 0.2 percent, and the Dow Jones Industrial Average (.DJI) added about 0.4 percent ー both indices led by gains in industrial and technology stocks. The Nasdaq also gained about 0.2 percent in morning trading.
Democrats are expected to regain control of the House, while Republicans are likely to maintain a grip on the Senate. Meanwhile, Democrats are expected to make headway in 36 gubernatorial races. But Grace emphasized that no matter who wins, the market will still react favorably ー at least for the next 12 months.
"It's funny. It's a lot of fanfare, and there is a lot of attention, and people want to worry about something, so I guess this is as good a reason as any," he said.
But the rally won't necessarily be equal opportunity for all. Grace said he expects health care, infrastructure, financials, and technology to perform best, even if technology and financials have taken a bit of a beating this year.
But Grace's outlook isn't all bullish. He called the Trump administration's trade war with China a "wild card," that could derail the U.S. economy ー in the same way some economists blame the 1930 Smoot-Hawley tariffs for throwing the U.S. into the Great Depression.
For now, however, Grace recommends investors enjoy the rally from midterms.
"Don't lose sleep, do enjoy the melt-up ー wherever that happens as long as it does ー but simultaneously prepare for a meltdown. It is very clear to me that that is in the cards, it is going to happen," he said.
For full interview click here.