The Real Reason Wall Street Is Voting Republican

The market loves a divided government
By Kevin Spak,  Newser Staff
Posted Nov 1, 2010 1:29 PM CDT
Visitors to the New York Stock Exchange watch the action on the trading floor, Tuesday, Oct. 19, 2010, in New York.   (AP Photo/Henny Ray Abrams)

(Newser) – Wall Street is giddy over the prospect of a Republican congressional takeover—and not because of the GOP’s pro-business rhetoric. The real reason is that the stock market loves a divided government, writes Costas Panagopoulos of the Christian Science Monitor. Historically, the Dow has climbed an average 11.1% annually when Congress and the White House are controlled by different parties, more than double the pace it has grown under unified government.

The combination of an Obama administration with a Republican House is especially juicy. From 1975 to 2009, the market has risen just 4.8% when Democrats controlled both the White House and Congress. But under a Democratic president and Republican-controlled House, the market has shot up a whopping 19.5% per year. One possible explanation for the divided divide? Businesses prefer the stable policies a gridlocked government can't help but provide.

My Take on This Story
Show results without voting  |