There are definitely some stocks that would benefit if the GOP takes the Senate in Tuesday's elections, including those of energy, medical device and housing companies.
MarketWatch contributor Michael Brush
notes that stocks tend to do well in any event after mid-term elections — since 1950, the S&P 500 has risen 16 percent on average following them.
Besides that, stocks also tend to outperform in the third year of a presidential term, which starts come January for President Obama, he adds.
Marshall Nickles, an economics professor at Pepperdine University, believes the positive third-year presidential factor tends to come into play since presidents want to bolster the economy so their party wins the next election, according to Brush.
"Layer on a few bullish trends — economic growth continues to improve, low inflation gives the Fed room to hold off on rate hikes and lower gasoline prices are fattening wallets — and now seems to be a good time to be in stocks, concludes Bruce Bittles, chief investment strategist at brokerage firm Robert Baird," Brush, publisher of the stock newsletter Brush Up on Stocks, wrote.
While nothing about the stock market is always a sure thing, Brush says the backdrop for equities certainly looks positive at the moment.
That being the case, Brush says that if Republicans win a majority in the Senate and therefore take control of both houses of Congress, it would benefit some sectors that have been thwarted by Democratic control of the Senate, which has had a different set of priorities in some cases.
First, oil producers and refiners would benefit, since Democrats and the White House have promoted alternative energy sources and environmental restrictions over fossil fuels.
Based on data from Lawrence McDonald, the head of U.S. macro strategy at Newedge, Brush said oil sands plays Canadian Natural Resources, Canadian Oil Sands and Cenovus Energy could benefit, plus refineries set up to process oil sands such as Valero and Philips 66.
Coal producers such as Peabody Energy, Arch Coal and the Market Vectors Coal exchange-traded fund could also benefit, McDonald added.
A tax on medical devices that was pushed through by the Democrats with Obamacare might be repealed with GOP control of Congress, Brush said. In that case, Boston Scientific, Medtronic and St. Jude Medical might be among the stocks to benefit.
In the housing sector, Brush said a Republican Congress might roll back some regulations in the housing industry, which could be beneficial for the stocks of Fannie Mae and Freddie Mac, plus some mortgage insurers such as MGIC.
If the Republicans take the Senate in addition to their current control of the House of Representatives, Wall Street will get what has historically been the most bullish legislative composition in the post-war era: a Republican-controlled Congress and a Democratic president, USA Today
That's according to data from Sam Stovall, U.S. equity strategist at S&P Capital IQ.
"Investors may have forgotten that the combination of a Democratic president and a unified Republican Congress has been accompanied by the best average performance for the S&P 500 since 1945," Stovall told clients in a report early Monday.
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