llustration: Aïda Amer/Axios

Midterm elections have historically been a no-lose scenario for stocks. Dating back to the 1950s, the S&P 500 has always been higher a year after the midterms, no matter the outcome. According to Capital Ideas, stocks in the year following midterms have performed twice as well as other years.

The bottom line: Markets may shrug if there is a Democratic sweep, because the next Congress is "very unlikely to undo the major market-impactful legislation that has already been passed under President Trump," like tax cuts, strategists at UBS point out.

If Republicans maintain control, stocks could jump higher temporarily, Art Hogan, a strategist at investment firm B. Riley FBR said, because investors will think "here comes more deregulation, and tax cuts 2.0 — but then they will realize we might have more work to do than that."

The impact on the economy is more uncertain.

  • If Democrats take the House and the Senate, brace for "slower economic and employment growth," since it eliminates the possibility of another tax-cut boost to the economy, John Herrmann, who heads up interest rate research at MUFG Securities, wrote in a note.
  • Gridlock won't "capsize the economic boat," S&P Global's chief economist Beth Ann Bovino wrote in a research note, but it will create big questions around government spending, which boosts economic growth.

What to watch: The midterms are in "second place" on investor's minds after worries about China and trade, Hogan said.

Go deeper

Trump pushes to expand ban against anti-racism training to federal contractors

Trump speaking at Moon Township, Penns., on Sept. 22. Photo: Mandel Ngan/AFP via Getty Images

President Trump announced late Tuesday that the White House attempt to halt federal agencies' anti-racism training would be expanded to block federal contractors from "promoting radical ideologies that divide Americans by race or sex."

Why it matters: The executive order appears to give the government the ability to cancel contracts if anti-racist or diversity trainings focused on sexual identity or gender are organized. The memo applies to executive departments and agencies, the U.S. military, federal contractors and federal grant recipients.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 12:30 a.m. ET: 31,517,087 — Total deaths: 968,726 Total recoveries: 21,622,862Map.
  2. U.S.: Total confirmed cases as of 12:30 a.m. ET: 6,895,685 — Total deaths: 200,768 — Total recoveries: 2,646,959 — Total tests: 96,612,436Map.
  3. Health: The U.S. reaches 200,000 coronavirus deaths — The CDC's crumbling reputation — America turns against coronavirus vaccine.
  4. Politics: Elected officials are failing us on much-needed stimulus.
  5. Business: Two-thirds of business leaders think pandemic will lead to permanent changes — Fed chair warns economy will feel the weight of expired stimulus.
  6. Sports: NFL fines maskless coaches.

Louisville declares state of emergency as Breonna Taylor decision looms

A demonstrator holds up a sign of Breonna Taylor during a protest in Louisville, Kentucky. Photo: Brandon Bell/Getty Images

Louisville Mayor Greg Fischer declared a state of emergency Tuesday "due to the potential for civil unrest" ahead of Kentucky Attorney General Daniel Cameron's expected announcement on the Breonna Taylor case.

Of note: Louisville has witnessed more than 115 days of protests over the police killing of Taylor, an unarmed Black woman, with calls for all the officers involved to be charged.

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