Stocks rally in New York after welcome election result
Investors look forward to the certainty provided by gridlock in Washington
Major benchmarks on Wall Street all gained more than 2% on Wednesday, a post-election bounce helped by a predictable election result that handed the Democrats a majority in the House of Representatives.
Republicans gained three seats in the Senate, a victory that will provide some measure of comfort for President Donald Trump and give him leeway in confirming appointments.
The divided Congress means that pushing through any major agenda items will be a herculean task, if it is possible at all, portending little policy uncertainty.
Outside hope for an infrastructure spending package that could boost industrial stocks may have dimmed somewhat on Wednesday when the president struck a defiant, combative tone in a press conference following his party’s success in outperforming polls in Senate races.
When asked whether he would be willing to compartmentalize congressional investigations and continue to pursue bipartisan legislation, the president answered, flatly: “No.”
“If they do that, then it’s just a warlike posture,” he warned.
Democratic lawmakers have already indicated that they will launch investigations into White House ethics violations, among other alleged abuses, and few expect representatives to back down on those promises once they assume House leadership positions in January.
While the Republicans will not likely be passing another tax cut, and there is little reason to hold one’s breath for a big infrastructure push, markets can rest assured that the chances of market-negative policy initiatives are also very slim.