There’s a simple reason stocks keep rising despite the storm of political uncertainty.
Even with a regime change in Venezuela and drama with the Federal Reserve, asset prices have stayed remarkably composed. The tariff shock last April helped remind investors how quickly markets can rebound from political noise.
The S&P 500 is positive to start the year and volatility — as tracked by the VIX — remains below its long-run average.
“Equity investors care a lot about future earnings and (a bit) about interest rates, but that’s the entire list of what drives stock prices,” said DataTrek Research co-founders Nick Colas and Jessica Rabe.
In other words, politics rarely register as a catalyst one way or the other, particularly when the fundamentals underpinning the market haven’t changed.
Plus, for what it’s worth, investors recognize that the White House will do whatever it can to keep the stock market from falling ahead of the midterm elections. The party of the sitting president almost always loses congressional seats, though the best odds of avoiding that is a booming economy and rising asset prices.