For Wall Street, the highest stakes in this year’s Election Day are at the lower levels of government.
He added that S&P 500 returns have averaged 7.7% when no single party controls the White House and Congress. Because president Trump has stated he won’t sign any bills limiting AI expansion and Democrats can’t achieve a veto-proof majority in both chambers of Congress, J.P, federal policies that threaten data centers will be difficult to implement,. For investors, gridlock can be a good thing.
“Legislative constraint has historically coincided with stronger equity-market returns,” said Jason Pride, chief of investment strategy at Glenmede. Morgan analysts told clients on Monday.
Investors are eyeing closely Tuesday’s state races for what their outcomes will mean for data-center projects crucial to the AI build-out. And while voters will determine which party controls Congress next year, it is the governor’s races in Texas, Ohio and Georgia—and the dozens of local referendums on data centers that will appear on ballots—that are just as likely to upend the AI trade and the stock market as a whole. Prediction markets currently expect Democrats to win governor’s races in Georgia and Nevada, both of which are currently run by Republicans. Traders are bracing for volatility in the short run.
Roughly a quarter of U.S. data-center capacity projected to come online by 2030 is in the Lone Star state , and an upset win from Regina Hinojosa, the Democratic nominee for governor who supports an immediate data-center moratorium, could put 13.3 gigawatts of announced projects at risk, the bank projects. Options traders are positioning for around a 1% swing—up or down—in the S&P 500 on Nov. 4, the day after the election, the largest single-day move of the month, according to Stuart Kaiser, head of U.S. equity trading strategy at Citi. Kirsch is planning on signing on after around 8 p.m. on Tuesday night while the election results trickle in, ready to take options orders from clients on indexes like the S&P 500 and VIX volatility gauge.
Governors are “on the front lines of AI/data center regulation,” RBC Capital Markets analysts wrote Monday. On Monday, the investment bank Jefferies hosted a client call focused solely on key political races in Texas and how they might affect investors.
