The stock market loves gridlock. But midterm elections won't resolve two big money fights.

By Mark DeCambre

Investors hoping for an Election Day lift face a looming government-spending showdown and growing opposition to AI data centers

🗳?Happy Election Day! Here's what I'm thinking about this morning: political gridlock.

Today's midterm elections could give stocks a lift by removing some of the uncertainty hanging over the markets. But depending on how the balance of power shakes out in Congress, investors could soon have a fresh set of worries on their hands.

For starters, lawmakers face a Dec. 11 deadline to keep the government funded. That's a problem for the outgoing Congress, before the newly elected members are sworn in next year. Then comes a potential debt-ceiling showdown in 2027. And while political gridlock can limit new spending, it won't erase American's growing debt or the interest that's piling up.

There's also the little matter of AI. As tech stocks have been getting rocked, investors will have an election fight to watch that's not red versus blue.

Voters in 10 states are weighing more than 40 proposals that could restrict data-center development in the U.S. Concerns about electricity costs and water use are putting local communities at odds with the companies spending billions to build out America's AI network. Who writes the laws in Washington certainly matters, but, for some tech investors, the more consequential races may be closer to home.

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Three stories worth your time ...

-- It may take weeks to tally the midterm election results. Here's why Wall Street isn't worried.

-- Marvell and Lumentum shareholders unite in panning merger deal: 'It's a trash offer'

-- Traders rushing into a leveraged ETF to make a bullish bet on the Nasdaq-100 just got burned

On markets and trading: The Nasdaq-100 index fell into correction territory Monday, marking its third decline this year of at least 10% from a recent high, as investors continue to raise questions about whether returns will match the massive sums being poured into AI infrastructure.

Futures were mixed heading to Tuesday trading, with the midterms offering a possible reset for investor sentiment. Options traders, however, were pricing in a relatively modest move in stocks of about 0.8% in either direction following the election, according to data from Option Research & Technology Services, as cited by Reuters.

Meanwhile, renewed U.S.-Iran tensions threatened to further complicate Tuesday's investing picture, sending oil futures higher after sharp declines in the previous trading session.

And there's another warning worth watching. MarketWatch's Steve Goldstein writes that signals from the corporate bond market have historically preceded big drawdowns for the S&P 500, and investors have certainly seen the debt market flashing a warning, particularly in high yield.

-- Check out our live markets coverage.

-- Plus: AMD's earnings are just hours away. This is what to watch for.

Palantir's priced for perfection ...

When is spectacular not good enough? Palantir nearly doubled its quarterly revenue to $2 billion, and its commercial business is now bigger than its government business. Great news, right?

Wrong!

Investors keyed in on slowing growth in new U.S. commercial contracts, which raised questions about how long the company can keep delivering standout corporate results. It's a common thematic refrain for AI-related stocks these days.

-- Apple's iPhone business is booming. Here's why the stock is falling anyway.

-- Oracle wants $20 billion to fund its AI future . Its stock is paying the price.

-- Disney job cuts may be coming. Investors are asking what comes next.

Retirement, inflation-proofed ...

Building a retirement nest egg is one challenge. But making it last may be the bigger task.

Take finance professor Scott Cederburg, who buys $10,000 in I-bonds every year. The idea? Let stocks build wealth while accumulating inflation-protected savings to draw on later.

As MarketWatch's Beth Pinsker explains, it's less about chasing today's attractive 5.51% yield on Series I debt than preparing for the risk that retirees often overlook: selling their stocks when the market is down.

Show me the math ...

An 80-year-old woman and her 85-year-old husband have more than $2 million in investments, a paid-off home, and enough pension and Social Security income to cover their bills. So why is their financial adviser pushing them to convert more of their $950,000 in traditional IRAs to Roth accounts?

It's not necessarily bad advice. But a strategy designed to save on taxes later can leave you paying considerably more today. Our Moneyist, Quentin Fottrell, explains why the couple should ask their adviser to show them the math.

AI's double-edged sword ...

The AI boom has given American factories a nice problem to have: more orders than they can handle. U.S. production reached a five-year high in October, helped by surging demand for computers, electrical equipment and other goods tied to artificial intelligence.

But there's a catch: That same demand appears to be straining supplies, delaying deliveries and contributing to higher prices, reports MarketWatch's Jeff Bartash. Manufacturers are also contending with tariffs on imported goods and elevated energy costs due to the Iran war.

For a stock market already questioning enormous AI costs, there's another complication: that this boom could make inflation harder to tame and, in fact, give the Federal Reserve another reason to lift interest rates.

'Trash offer'?

It's not often that shareholders of both companies in a merger agree on something. But investors in Marvell and Lumentum appear united in their displeasure over the chip maker's proposed acquisition of optical-components company Lumentum.

Lumentum shares plunged nearly 19% Monday, while Marvell's stock fell almost 13%. One Lumentum investor called the transaction a "trash offer." Tell us how you really feel.

About me

Mark DeCambre is editor in chief of MarketWatch. He has spent more than 20 years covering Wall Street, markets and personal finance, and writes Need to Know, drawing on the award-winning analysis and journalism of the newsroom.

-Mark DeCambre

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11-03-26 0712ET