© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2022. REUTERS/Brendan McDermid
(Reuters) – U.S. stock index futures edged higher on Tuesday ahead of a crucial midterm election that will determine control of Congress, with Republicans favored by polls to win control of the House of Representatives and possibly the Senate.
With Democrat Joe Biden in the White House, that potential result would lead to a split government.
Control of even one chamber of Congress would give Republicans the power to bring Biden’s legislative agenda to a halt and demand deep spending cuts.
“The question for many is whether investors will respond positively to the deadlock in Washington,” said Craig Erlam, senior market analyst at Oanda.
“On the one hand, the prospect of less spending could be viewed as aiding the inflation fight, but on the other the economy could be headed for recession and inaction in government won’t help.”
A surprise victory by the Democrats could throw the markets for a loop, potentially bringing to the fore concerns about tech-sector regulation as well as budget spending that could buoy already-high inflation, according to market participants.
Investors are also awaiting a key inflation reading due on Thursday, which is expected to show some easing in consumer prices and provide further clues on whether the U.S. Federal Reserve could shift to smaller rate hikes in the future.
Traders are currently betting on 63% odds of a 50-basis point hike at the Fed’s next meeting in December.
At 05:18 a.m. ET, were up 64 points, or 0.19%, were up 8.25 points, or 0.22%, and were up 49.75 points, or 0.45%.
Among stocks, Take-Two (NASDAQ:) Interactive Software Inc plunged 18.7% premarket after the videogame publisher lowered its annual sales outlook, while ride-hailing firm Lyft Inc (NASDAQ:) dropped 18.2% on forecasting current-quarter revenue below Wall Street estimates.
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