The next two weeks could also be volatile — but for different reasons, market observers say.
Next week brings the November Federal Reserve meeting, which investors will be watching to see what the central bank does with rate hikes. While many expect the Fed to raise rates by another 75 basis points, some expect less hawkish language about the need to bat down inflation following recent data.
Some are also optimistic of smaller hikes at future meetings. Bill Adams, chief economist at Comerica Bank, said next week's potential hike is "probably the last one that big in this cycle." Jay Hatfield, CEO of Infrastructure Capital Management, said he was also "bullish" about next week's message, saying the central bank could roll back previously strong language on the need to cool inflation at any cost.
Market observers also expect the midterm election to affect markets, particularly if Republicans take a majority in the House of Representatives or Senate.
"Equity markets tend to like a gridlock situation because the chance of some major tax law legislation ... is slim," said Megan Horneman, chief investment officer at Verdence.
