Review & Preview: A Divided Market on Election Day

Kind of Blue? Many political pundits (and market experts) are predicting a big victory for Democrats in Tuesday’s midterm elections. But the predominant color on Wall Street this Election Day was green.

Sure, the Dow Jones Industrial Average ended the Tuesday trading session down 0.4%. But the S&P 500 and Nasdaq Composite both rallied, rising 0.4% and 0.8% respectively. That was largely due to a rebound in chip, software and other tech stocks—despite the fact that Apple and Palantir Technologies each fell about 2% following their earnings reports.

It might seem trite to suggest that the midterms don’t matter at all. They clearly do, especially since the results likely will kick into high gear the speculation about the 2028 race for the White House. But for the market, much of the political noise is just that: Noise. Investors would be wise to filter it out.

“The election results could trigger an immediate market reaction, particularly as the Senate outcome becomes clearer. However, the market’s knee-jerk trade could reverse as investors recognize that gridlock remains the most likely policy outcome in either case,” wrote Brian Gardner, chief Washington policy strategist for Stifel, in a report Tuesday.

And in case you haven’t heard this before, Wall Street loves gridlock.

“A lot of clients ask us about the election,” Jim Baird, chief investment officer with Plante Moran Financial Advisors, said in an interview with Barron’s. “But most of the time, stocks rally after the midterms. They tend to do very well.” His advice? Stay diversified.

The most important economic news that will come from Washington in the next few months arguably has nothing to do with the winners of the midterms. It’s all about interest rates—and Federal Reserve chair Kevin Warsh isn’t going anywhere. His term just started a few months ago.

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Company

Last

Chg

Chg%

Dow Jones Industrial Average

51,786.72

-197.26

-0.38%

S&P 500 Index

7,568.92

27.52

0.36%

NASDAQ Composite Index

25,372.01

207.65

0.83%

Market Data as of

The Hot Stock: Fiserv +12.5%
The Biggest Loser: Gartner -13.2%

Best Sector: Information Technology +1.3%
Worst Sector: Materials -1.9%

Created with Highcharts 9.0.1Tuesday, Nov. 3Index performanceSource: FactSetAs of Nov. 3, 4 p.m. ET

Created with Highcharts 9.0.1Nov. 3-1.00-0.75-0.50-0.2500.250.500.751.001.251.50%Nasdaq CompositeS&P 500Dow industrials

Give Me More!

Apple’s results yesterday show that investors are behaving like Veruca Salt in the original Willy Wonka & the Chocolate Factory movie from the 1970s. They want the whole world. And they want it now! Apple, after all, beat earnings and revenue estimates. Guidance for the holiday quarter was impressive too. The problem? Gross margins declined slightly.

But it looks like Monday’s Apple turnover was an overreaction. As my colleague Angela Palumbo pointed out in her post-earnings analysis, this could be a good time to buy the dip. After all, she noted that according to Dow Jones Market Data, Apple’s stock has been higher 68% of the time in the month after earnings over the past 10 years. One year after earnings, that number rises to 92% of the time.

One investor told Barron’s that the tech selloff could soon be nearing an end as well. The Roundhill Magnificent Seven ETF now trades for just 24.5 times earnings estimates for the next 12 months, a discount to its 5-year average of just under 29.

“We’re underweight the Magnificent Seven now but we’re probably getting to a point where these valuations could make them good buying opportunities again,” said Jason Harrison, chief investment officer at FAS Wealth Partners.

Don’t sweat the recent tech sector slide. It’s healthy to see investors showing skepticism when it comes to AI plays, even they are acting a bit impetuously. That’s just making the stocks look more tempting.

The Calendar

Aflac, Albemarle, Allstate, APA, AppLovin, Arm Holdings, Atmos Energy, CDW, Cencora, CF Industries, Charles River Laboratories International, Coherent, Corpay, CVS Health, Datadog, Edwards Lifesciences, Emerson Electric, Eversource Energy, Expedia Group, Fair Isaac, Fidelity National Information Services, Host Hotels & Resorts, Insulet, Kraft Heinz, Martin Marietta Materials, McDonald’s, McKesson, MercadoLibre, Metlife, Motorola Solutions, News Corp, Novo Nordisk, PTC, Qnity Electronics, Qualcomm, Stanley Black & Decker, Steris, Texas Pacific Land, TKO Group Holdings, Trimble, Uber Technologies, Vivmark Residential, W.W. Grainger, and Zimmer Biomet Holdings report earnings Wednesday.

ADP releases its National Employment Report for October. The consensus call is for a 70,000 increase in private-sector employment, following a 90,000 jump in September.

The Institute for Supply Management releases its Services Purchasing Managers’ Index for October. Consensus estimate is for a 55 reading, slightly above the September figure of 54.9.

—Dan Lam

What We’re Reading Today

Mapping the Markets in 2027. How can investors gain an edge in an AI-dominated market and economy? Join us on December 10, 2026, for discussions with Wall Street strategists and money managers about the outlook for stocks, bonds, interest rates, and policy in the year ahead, and the best ways to navigate an uncertain investment landscape.

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