3 Sectors to Watch Closely Ahead of 2022 Midterm Elections

  • The outcome of the midterm elections will significantly influence domestic politics, but it will be felt the most in the markets. In this article, three sectors set for the most impact are identified.
  • The Healthcare Industry: If Republicans gain control of either chamber, they may attempt to reduce healthcare spending. This could have a major impact on both insurance companies and hospitals.
  • The Energy Industry: Republicans are strong supporters of fossil fuel, which is of concern for clean energy companies. In contrast, the Democrats support renewable energy, which adversely impacts oil and gas companies.
  • The Infrastructure Sector: Republicans have historically been major supporters of this industry, but they disagree on the monetary commitment needed for infrastructure development to succeed.
Sectors to Watch - 3 Sectors to Watch Closely Ahead of 2022 Midterm Elections

Source: shutterstock.com/Joaquin Corbalan P

Midterm elections are just around the corner. And many people are wondering how they will affect the stock market. Elections are a very important time for investors since results will give clues as to which industries will do well in the coming year. Paying attention to these clues is important to make more profitable investments. By making use of political conditions, it is possible to make profitable investments even in a challenging market. So, it is better to keep up with elections when making investment decisions.

In essence, midterm elections are often seen as a way for voters to express their opinion of the president’s performance. This is especially true when it comes to economic policy. Over the past year, we’ve seen many changes in monetary policy, and voters will decide what the future holds. Will there be more tax cuts? Will spending continue to increase? What will happen to interest rates? These are all important questions that will be decided this November. The answer to these questions will play a pivotal role in determining the economy’s future.

While the election results will have far-reaching consequences for the country as a whole, a few sectors are particularly vulnerable to the outcome. I have found three sectors to watch during the midterm elections:

Healthcare

stethoscope on a stock chart representing healthcare stocks to buy
Source: Shutterstock

Healthcare is one of the key sectors to watch for the future of our country. The two parties have different approaches to healthcare. The Republicans recently advocated for less government control over healthcare. On the other hand, the Democrats believe that the government should assist in providing affordable healthcare for everyone. Both parties agree that healthcare is important but have different concepts regarding the sector.

Midterms are a key battleground that healthcare investors are closely watching. The Republicans have often expressed their desire to repeal and replace the Affordable Care Act. On the other hand, Democrats are looking to maintain and improve it. The two parties also differ on how they would like to address the rising cost of prescription drugs. In general, the Republicans favor a free market approach, while the Democrats favor more subsidies and drug price restrictions. Whoever wins control of Congress will have a major impact on the future of the healthcare sector.

Renewable Energy

Environmental protection, renewable, sustainable energy sources. Plant growing in the bulb concept
Source: Proxima Studio / Shutterstock.com

In August, President Joe Biden signed a comprehensive $369 billion climate and clean energy legislation, delivering on one of his key campaign promises to invest in renewable energy and create jobs in the emerging clean economy. The bill will also help position the U.S. as a global leader in the fight against climate change, something that is sure to be a central issue in the midterms. The bill extends tax credits for wind and solar power, electric vehicles, and energy-efficient buildings. In response to the legislation, energy stocks such as NextEra Energy (NYSE:NEE), Plug Power (NASDAQ:PLUG), and First Solar (NASDAQ:FSLR) soared. Energy is among the most important sectors to watch due to Biden’s goal of transitioning the U.S. to a clean energy economy by 2050.

In contrast, former President Donald Trump’s administration strongly advocated for the use of fossil fuels, and Republicans have generally followed suit. However, there is increasing concern about the environmental impact of such policies, and many voters are eager to see more investment in renewable energy. Republicans must decide how to balance their support for fossil fuels with their commitment to renewable energy. This will be no easy task. However, it will have a major impact on the outcome of the election.

Democrats have been vocal proponents of investing in renewable energy sources like solar and wind power. They argue that this will create jobs, reduce dependence on fossil fuels, and help to combat climate change. Republicans, on the other hand, believe renewable energy should be developed alongside traditional sources, such as coal and gas. With both parties presenting different plans for the future, energy policy will surely be a key talking point.

Sectors to Watch: Infrastructure

A series of roads and overpasses connect in an aerial view.
Source: Shutterstock

Infrastructure spending is a critical issue for the U.S. The country’s infrastructure needs are massive. And they are only expected to grow as the population ages and infrastructure deteriorates. Republicans and Democrats have both proposed plans to increase infrastructure spending. However, there is a significant discrepancy between the two parties’ proposals. Last year, Republicans countered Biden’s $1.7 trillion infrastructure plan with a $257 billion proposal.

The disparity between the two proposals highlights the importance of infrastructure spending as an election issue. With such a large gap between the two parties, it’s clear that whichever party controls Congress will have a major impact on how much money is dedicated to infrastructure improvements in the coming years.

Suppose the Democrats successfully retain control of both the House and the Senate. In that case, we can expect to see more ambitious legislation along the lines of President Joe Biden’s $1.2 trillion infrastructure bill last year. This would be a major win for infrastructure companies, as they could continue to count on a steady stream of government contracts.

However, if Republicans successfully take back control of the House, we can expect less spending for infrastructure development. This would be a major setback for infrastructure companies, as they would have to scale back their operations and lay off workers. The midterm elections will therefore be a key determinant of the fortunes of the infrastructure sector.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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