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America votes — What you need to know in markets on Tuesday

Myles Udland
Markets Reporter

Tuesday is Election Day in America.

All day, Americans will head to the polls to cast their vote in the midterm elections.

Data from Nate Silver’s 538 on Monday gave Democrats an 87.5% chance of taking control of the House with Republicans being given a similar 83.2% chance of retaining control of the Senate.

On Monday, markets finished mixed with the S&P 500 (^GSPC) gaining 0.56%, or 15.26 points, while the Dow (^DJI) advanced 0.76%, or 190.87 points. The Nasdaq (^IXIC) fell 0.38%, or 28.14 points, as shares of tech heavyweights Apple (AAPL) and Amazon (AMZN) declined.

And while polls in the U.S. will not begin closing until well after the market closes, futures markets could be active overnight Tuesday depending on the outcome, with Democrats taking control of both houses of Congress or Republicans retaining control of both houses the outcomes which would likely create the most market volatility.

But history suggests that in the months ahead, stocks are likely to be far higher than they are today.

In this Nov. 4, 2018, photo Tim Boyden uses the loose fall leaves in front of his business Out On A Limb Gallery in Eugene, Ore., to encourage people passing by to vote in the midterm election. (Chris Pietsch/The Register-Guard via AP)

Joe LaVorgna at Natixis noted Monday that in the 24 instances since 1922 that there have been midterm elections, the S&P 500 has done quite poorly in the nine months leading in the election, rising just 0.6% on average, but in the nine months following midterms, the S&P 500 has an average return of 14.4%.

LaVorgna adds that stocks have declined in just five post-midterm periods since 1922, with the last coming 1978; in the 12 months following midterm elections, stocks have dropped just four times since 1922. Stocks, as they say, usually go up.

Greg Valliere, chief global strategist at Horizon Investments, said Monday that the election’s impact on markets is likely “not enormous.” Valliere does, however, see four clear implications from his base-case of Democrats taking the House and Republicans retaining the Senate — more gridlock, more conservative judges, no threat to Trump’s economic agenda, and a flood of subpoenas against Trump and his aides. 

Elsewhere on Tuesday, the economic calendar will bring investors the latest JOLTS report, which is expected to show job openings in September remained near a record high.

And on the earnings side, notable companies reporting results on Tuesday should include Ralph Lauren (RL), Eli Lilly (LLY), and CVS (CVS).

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland