There are two big hurdles for markets in the coming week – another potentially hot consumer inflation report and the midterm congressional elections. Stocks were up on Friday but ended a tough week with losses, following tough interest rate talks from Federal Reserve Chairman Jerome Powell on Wednesday. Powell suggested the central bank may have to raise rates even more than it had expected in order to crush inflation, making Thursday’s October consumer price index report even more more critical. What is at stake in Tuesday’s election is the control of Congress and that could decide how the money is spent and how much is spent on different programs. “The most important thing for the market to know is that the election is over,” said Ed Mills, political analyst at Raymond James. “100% of the time the S&P 500 is up 12 months after the midterm elections.” The House is currently controlled by Democrats, and Democrats have the majority when considering Vice President Kamala Harris’ deciding vote in the Senate. “We anticipate the most likely outcome is a Republican House of Representatives,” Mills said. “The Senate is close. I think the Republicans have the advantage right now, but I don’t think we really know that.” Midterm rallies Stocks tend to gain in the final months of midterm election years, and strategists expected the market to rise. Soaring interest rates have stifled growth and technology stocks. The 2-year Treasury yield rose and briefly touched a 15-year high of 4.8%, after Friday’s stronger-than-expected October jobs report. The S&P 500 rose 1.4% on Friday but ended the week at 3,770 with a loss of 3.4%. The Nasdaq fell 5.7% for the week but gained 1.3% on Friday. “There will absolutely be a relief rally if the results are clear,” said Julian Emanuel, head of equity, derivatives and quantitative strategy at Evercore ISI. Emanuel said rumors of China lifting Covid restrictions were helping equities and sending commodities higher on Friday, and that could also be a catalyst in the week ahead if there is any real news confirming the speculation. “If the results [of the election] are unclear but not heavily disputed, the positive news that may come out of China will be enough to help this post-midterm rally,” he said. “Market sentiment is quite overwhelming in our view. , so there will likely be a bigger rally if Republicans win. CFRA’s chief market strategist Sam Stovall said even when interest rates are rising, the midterm election has been a catalyst for stocks. an average of 12.8% 12 months later,” Stovall said. The years this happened were 1946, 1958, 1994 and 2018. “Even a rising rate environment hasn’t derailed the impact of post-midterm optimism,” he said. According to CFRA, the sectors that perform best from November 1 of a midterm election year to November 1 the following include semiconductor equipment, up an average of 48.2% in this period since 1990. Footwear is also doing well, up around 42%, as is electronic equipment and instruments.During these years, the S&P has added an average of 16% during this period, while the Nasdaq gained 32.6%.In addition to the election, the corporate earnings season continues.Reports are expected from dozens of companies, including Walt Disney, AstraZeneca , Dupont, Wendy’s and Occidental Petroleum Hot inflation The CPI is by far the most important economic report expected for the coming week, and economists expect consumer inflation to have risen to an annual rate of 7.9% in October. Excluding food and energy, core CPI is expected to rise at a rate of 6.5%, according to Dow Jones. In September, the overall CPI increased by 8.2%. “If it drops below 8%, that would be a psychological positive,” Stovall said. Friday’s October jobs report was stronger than expected with 261,000 jobs added in October, while economists expected 205,000. The strength in the labor market is seen as a source of inflation by the Fed and so far his rate hikes aren’t slowing job growth that much. If inflation data were to surprise on the downside, it would buck recent trends and be a potential positive catalyst for the market. Schedule for the coming week Monday Earnings: Palantir Technologies, Viatris, Activision Blizzard, Lyft, Take-Two Interactive, TripAdvisor, Brighthouse Financial, Brookdale Senior Living, Mosaic, Cabot, International Flavors and Fragrances, Choice Hotels, BioNTech, NRG Energy 3:00 p.m. Consumer Credit 3:40 p.m. Loretta Mester, Cleveland Fed President, Susan Collins, Boston Fed President 6:00 p.m., Tom Barkin, Richmond Fed President, Tuesday, Election Day Consumer Products, Norwegian Cruise Line, Hain Celestia l, Party City, , Akamai, Lucid Group, Affirm Holdings, Axon, Sprouts Farmers Market, 3D Systems, Angi, Occidental Petroleum, AMC Entertainment, NortonLifeLock, Ambac Financial, Allbirds NFIB Small Business Survey Wednesday Earnings : DR Horton, Wendy’s, Hilton Grand Vacations, Honda Motor, Beyond Meat, Adidas, Performance Food Group, Capri Holdings, SeaWorld, Hanesbrand, Canopy Growth, F ossil, Rackspace, Redfin, Bumble, Coupang, Unity Software, Kinross Gold, Rivian Automotive, Trade Desk, Jamf Holding, Rocket Lab Fed President Tom Barkin Thursday Gains: AstraZeneca, Becton Dickinson, Edgewell Personal Care, Tapestry, Warby Parker, Ralph Lauren, ArcelorMittal, WeWork, Sally Beauty, Yeti, Toast, Beazer Homes, Aurora Cannabis, Poshmark, Toast Christopher Waller in Australia 8:30 a.m. Initial jobless claims 8:30 a.m. CPI 9:00 a.m. Philadelphia Fed President Patrick Harker 9:35 a.m. Dallas Fed President Lorie Logan 12:00 p.m. 30 Cleveland Fed President Loretta Mester 1:30 p.m. Kansas City Fed President Esther George 2:00 p.m. Federal Budget 6:35 p.m. New York Fed President John Williams Friday Veterans Day Earnings: SoftBank, Embraer Bond market closed 10 h 00 Consumer Sentiment
.