Markets Bounce Ahead of Midterms, Inflation Report | ETF Trends

Markets traded up on Monday morning in advance of the midterms and a key inflation report coming out. The Dow Jones Industrial Average rose by 138 points, or 0.4% in morning trading, while the S&P 500 climbed 0.3% and the Nasdaq Composite gained 0.1%.

The midterm elections on Tuesday will determine which party controls Congress, which will impact future spending. Brad Conger, deputy CIO at Hirtle Callaghan & Co., is quoted by CNBC as saying that the market is hoping “that some kind of Republican sweep of Congress will lead to either a sort of stalemate in Washington, which they read as good, or at least no new spending, which would be good for rates and Treasury supply.”

In a note issued on Monday, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, wrote that investors may want the gridlock that would most result from a divided government, since such a scenario has historically led to above-average gains.

Plus, investors hope that Thursday’s consumer price index report will provide insight into how the Federal Reserve will proceed with interest rate hikes to curb inflation. Baird investment strategist Ross Mayfield wrote in a note to clients that “for the equity and bond markets to match the post-peak inflation performance noted in the table, inflation needs to keep coming down … at a faster pace than we’ve yet seen.”

Regardless of how the midterms or CPI report plays out, markets are expected to remain in choppy waters. This is where active management can help.

While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.

“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.

As part of its lineup of active exchange traded funds, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP), the T. Rowe Price Dividend Growth ETF (TDVG), the T. Rowe Price Equity Income ETF (TEQI), the T. Rowe Price Growth Stock ETF (TGRW), and the T. Rowe Price U.S. Equity Research ETF (TSPA).

T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.

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