WASHINGTON, D.C. — As the 2024 midterm campaign intensifies, Donald Trump’s attempt to shift the narrative away from a sluggish economy has run into fresh voter resistance, a factor that analysts say could shape both the election and market positioning.

In September 2024, a Pew Research poll found that 65 % of self‑identified Republicans believed the U.S. economy was getting worse. Six months later, after Trump announced “liberation day” tariffs on a swath of imports, that figure fell to 33 %, according to a follow‑up survey by the same firm, suggesting that trade‑policy rhetoric has softened partisan pessimism.

KEY POINTIn September 2024, a Pew Research poll found that 65 % of self‑identified Republicans believed the U.

Wall Street responded with modest optimism. The S&P 500 climbed 1.2 % on Tuesday, while the Dow Jones Industrial Average added 0.9 %. Treasury yields slipped 4 basis points to 4.25 % on the 10‑year note, reflecting investors’ view that the tariff shock may be contained, though volatility remains elevated.

“The market is pricing in a narrower window for a hard landing,” said Laura Chen, senior strategist at Meridian Capital. “Equity investors are looking for signs that the Fed can hold rates steady while the trade dispute cools, but any misstep could reignite inflation fears.” The Fed’s benchmark rate sits at 5.25‑5.50 % after its July hike.

For risk‑averse portfolios, the shift matters. Foreign institutional investors increased holdings of U.S. Treasury bonds by $12 billion in the last week, according to Bloomberg data, while hedge funds trimmed exposure to consumer‑discretionary stocks by roughly 8 %. The interplay of political sentiment and monetary policy is prompting a re‑balancing toward defensive sectors.

Key Takeaways

• Republican economic pessimism dropped from 65 % to 33 % after Trump’s tariff announcement.
• U.S. equity indices posted modest gains; Treasury yields eased amid reduced trade‑war anxiety.
• Investors are shifting toward defensive assets as the Fed maintains a high‑interest‑rate stance.

With the midterms looming, the lingering disconnect between voter perception and policy signals is likely to keep markets on edge, as investors weigh the durability of any economic rebound against the uncertainty of political rhetoric.