Beyond the Election: What’s Driving Markets Into 2027?

Election Day may be behind us, but the market’s work is far from finished. In the days following the 2026 midterm elections, investors saw sharp swings in stock prices—and another reminder that market movements rarely have a single explanation. While political developments capture attention, inflation, interest rates, corporate earnings, and the changing economics of artificial intelligence may have a more lasting influence on investment decisions.

On a recent episode of RHP Market Talk, Natalie Picha, Partner and Chief Experience Officer at RHP Wealth Management, spoke with Glenn Royal, Partner and Chief Investment Officer, about the market’s initial response to the election and the factors they are watching as 2027 approaches.

Market reactions are about more than election results

The market rallied immediately after the election, then reversed course before rebounding again. Glenn cautioned against attributing those moves solely to the outcome at the ballot box. Trading activity among large institutional investors, following a difficult October for some strategies, may also have contributed to the volatility.

The takeaway is not that elections are irrelevant. Public policy matters. But investors should be wary of making portfolio changes based only on political expectations or the emotion of a particular news cycle. Markets continuously incorporate a much wider set of information.

AI enters a more demanding phase

Artificial intelligence remains a major market theme, but the conversation is evolving. Earlier enthusiasm for virtually any AI-related investment is giving way to tougher questions: How much capital is being spent on data centers? How are companies financing that buildout? And when will those investments produce meaningful returns?

Glenn described a shift toward greater scrutiny of free cash flow and return on investment, particularly among the large technology companies funding AI infrastructure. That reassessment was already underway before the election and may help explain some of the recent pressure on technology shares.

Inflation and the Fed may set the pace

Energy costs have added another layer of uncertainty. Glenn pointed to the conflict in Iran and its effects on fuel prices, refining capacity, and inflation. A hotter-than-expected inflation report also renewed attention on the Federal Reserve and the possibility of higher interest rates.

For investors, the relationship matters: inflation influences the Fed’s decisions, interest rates affect borrowing costs and bond prices, and those changes can ripple through stock valuations. Glenn emphasized that earnings and inflation—not simply election headlines—are central to the market outlook.

What could 2027 mean for bonds and stocks?

In the bond market, Glenn explained why duration—the sensitivity of bond prices to changes in interest rates—deserves attention. He described RHP’s shorter-duration positioning at the time of the discussion as a way to limit sensitivity to unexpected rate increases while retaining flexibility to consider longer maturities if yields become more attractive.

For equities, he sees corporate earnings as an important counterweight to the uncertainty. Although earnings growth may moderate from unusually strong levels, continued growth could support stocks. The pace of AI investment, energy prices, and the direction of interest rates remain important variables. These are outlooks, not assurances: market conditions and expectations can change.

Diversification can help investors stay the course

Recent market turbulence also underscored why a portfolio need not move in lockstep with a technology-heavy index. Glenn discussed the role of holdings across different asset classes and markets, including international investments, infrastructure, and precious metals, in building a portfolio with different sources of risk and return.

Diversification cannot eliminate losses or guarantee a particular result. Its purpose is to manage concentration and help align a portfolio’s risks with an investor’s objectives, time horizon, and comfort with volatility.

Focus on what you can control

As 2026 draws to a close, investors will continue to encounter headlines about politics, inflation, AI, and the possibility of a year-end rally. The more useful question may be whether their financial plan is built to withstand a range of outcomes.

Natalie and Glenn closed the conversation with a consistent message: resist the temptation to react emotionally to short-term market moves. Review your goals, understand the risks you are taking, and keep your investment strategy anchored to the long term.

For more perspective, listen to RHP Market Talk, Episode 64, “Beyond the Election: What’s Driving Markets Into 2027?”