Stocks rallied Tuesday as investors awaited the outcome of the midterm elections in the U.S.

The S&P 500 (^GSPC) inched higher by 0.6%, while the Dow Jones Industrial Average (^DJI) ticked higher by 335 points, or roughly 1%. The technology-heavy Nasdaq Composite (^IXIC) edged higher by 0.5% after wavering during afternoon trading.

It was the third-straight day of gains for the major indexes ahead of another week of potential market-moving events: corporate earnings, midterm elections, and inflation data.

Investors are focused on Tuesday’s midterm elections that will determine control of the House and Senate for the remainder of President Joe Biden’s first term. Historically, Wall Street has preferred a split Congress or White House, with political gridlock that could impede major policy changes, an outcome that investors see as favorable for equities.

According to JPMorgan’s latest client survey, 39% of respondents were split on whether the U.S. midterm elections will be a positive catalyst for risk markets or non-event, while 21% expected negative implications. Regardless of the winner, some strategists argue that midterm outcomes have a “modest” influence in financial markets.

“The overall near-term implications of the 2022 U.S. Midterm Elections are quite modest for FX markets,” Meera Chandan, FX strategist at JPMorgan, wrote in a note to clients. “Markets should thus continue taking guidance more from the Fed’s monetary policy decisions than from any new large fiscal packages. One wildcard worth flagging is the risk of renewed uncertainty around the debt ceiling.”

Another closely watched item this week will be the Thursday release of October inflation data. Economists surveyed by Bloomberg expect headline CPI at an annual rate of 7.9%, down from 8.2% the month before. Even if the report shows prices starting to moderate, core CPI is far above the Fed’s comfort zone.

“The problem is going to be that in month over month terms, I think we're still going to see a fairly strong core CPI,” Franklin Templeton Fixed Income CIO Sonal Desai told Yahoo Finance Live on Monday. “And I don't think that a combination like that, together with the relatively strong jobs numbers we got on Friday, it's not going to give the Fed much comfort in terms of changing the path which was outlined by Chairman Powell last week.”