Episode 36: Building Wealth Podcast with Steven Sitkowski
How Elections Affect the Stock Market: AI, Interest Rates, and Market Volatility
Can an election change the direction of the stock market? And should investors reconsider their strategies when political power shifts?
In Episode 36 of the Building Wealth Podcast, Steven Sitkowski examines the market's reaction to the 2026 U.S. midterm elections, the recent selloff in technology stocks, and the economic factors influencing investor confidence.
From artificial intelligence and inflation to corporate earnings and interest rates, Steven explains why understanding market fundamentals matters more than reacting to political headlines.
Do Elections Really Affect the Stock Market?
Following the 2026 midterm elections, investors are questioning how the changing political landscape could influence the financial markets.
Steven acknowledges that elections can create uncertainty, particularly when investors anticipate changes in regulation, government spending, or economic policy.
However, he argues that the political party controlling Congress is not necessarily the most important factor determining stock market performance.
Instead, Steven encourages investors to focus on what ultimately drives company valuations: earnings.
While elections may influence short-term sentiment, corporate profitability, interest rates, and economic conditions play a significant role in shaping market trends.
Why Are AI and Technology Stocks Experiencing Volatility?
Artificial intelligence remains one of the biggest themes influencing the stock market.
However, recent concerns surrounding AI infrastructure, data center development, and potential regulatory changes have contributed to selling pressure across technology stocks.
Steven discusses how investors have become increasingly cautious about companies involved in AI development, particularly those making substantial investments in infrastructure.
He also highlights the challenges facing smaller companies supporting AI data centers, some of which have experienced significant stock price declines.
Despite the volatility, Steven remains optimistic about the long-term potential of artificial intelligence.
His perspective is that AI development will continue, although investors should carefully evaluate individual companies rather than assume every AI-related stock will succeed.
Inflation, Oil Prices, and Interest Rates
Inflation remains a major concern for investors and policymakers.
Steven discusses how elevated oil prices and geopolitical tensions can contribute to higher consumer costs, creating additional challenges for the Federal Reserve.
At the time of recording, the 10-Year Treasury yield remained below 5%, while investors continued monitoring upcoming inflation reports.
Steven emphasizes the importance of economic indicators such as the Consumer Price Index (CPI) and Producer Price Index (PPI).
These reports provide insight into inflationary pressures and can influence expectations for future Federal Reserve interest rate decisions.
For investors, understanding the relationship between inflation, interest rates, and corporate earnings is essential when evaluating market conditions.
What Is Market Breadth Telling Investors?
Although major indexes have experienced volatility, Steven explains that the broader market is not necessarily as weak as headlines suggest.
He highlights seven consecutive weeks of bearish market breadth when comparing stocks reaching new 52-week highs with those reaching new lows.
However, he also points out that approximately 61.5% of stocks were trading above their 50-day moving average.
This suggests that while certain sectors, particularly technology, have experienced significant pressure, other areas of the market remain relatively resilient.
Steven also discusses sector rotation, where investors shift capital between industries as market conditions change.
Understanding these movements can help investors distinguish between weakness in individual sectors and broader market deterioration.
Why Investors Should Avoid Emotional Decisions
One of Steven's recurring lessons is the importance of maintaining perspective during market corrections.
He explains that financial markets move in cycles, with periods of growth, consolidation, and decline.
Rather than reacting emotionally to every market movement, investors can benefit from examining historical patterns, technical indicators, and company fundamentals.
Steven also discusses how market sentiment can change rapidly.
The Fear & Greed Index, for example, had moved from extreme fear toward a less pessimistic reading as market conditions stabilized.
His message is simple: short-term market volatility does not automatically signal the end of a bull market.
What Could Drive the Market Next?
Looking ahead, Steven identifies several important developments that investors should monitor.
These include upcoming inflation reports, Federal Reserve interest rate decisions, developments involving Iran and oil prices, and continued investment in artificial intelligence.
He also examines the S&P 500's technical position, noting that the index had recovered from an important support level but remained below its 50-day moving average.
While Steven sees reasons for optimism, he emphasizes that the market still needs additional confirmation before a stronger bullish outlook can be established.
Ultimately, he believes corporate earnings and economic fundamentals will remain more important than political headlines when evaluating the market's longer-term direction.
Key Takeaways from Episode 36
Elections can influence market sentiment, but corporate earnings remain a major driver of stock valuations.
AI stocks are experiencing volatility amid concerns about regulation, infrastructure spending, and future profitability.
Inflation and elevated oil prices continue to influence interest rate expectations.
Weak market breadth does not necessarily mean the entire stock market is declining.
Sector rotation can create opportunities and challenges across different industries.
The 50-day moving average can help investors evaluate changes in market momentum.
Emotional reactions to market corrections can interfere with disciplined investing.
Monitoring earnings, inflation, and interest rates provides important context for investment decisions.
Episode 36 of the Building Wealth Podcast with Steven Sitkowski reinforces an important investing principle: understanding what drives the market is more valuable than trying to predict every short-term movement.
Whether you're following the latest election results, evaluating AI stocks, or monitoring interest rates, maintaining a disciplined approach can help you navigate changing market conditions.
Watch the full episode to hear Steven's perspective on the election, market volatility, and the economic factors shaping the stock market.
Want to learn more about stock market education and trading strategies? Explore Market Mastery Group Reviews to discover what students are saying about their experiences learning with Steven Sitkowski and the MMG team.
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