How Stocks Tend to Perform If Midterm Elections Lead to Divided Government

Traders work on the floor of the New York Stock Exchange during morning trading in New York City, on Nov. 2, 2022. Michael M. Santiago/Getty Images

The U.S. midterm elections are not only an event that decides the fate of political power in Congress but also something that affects the stock markets.

In a note to clients, Jim Reid, a markets strategist at Deutsche Bank, pointed out that midterm elections are one of the “best historical buy signals for equities,” according to The New York Times.