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
The Real Reason Wall Street Is Voting Republican
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)

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. (More Barack Obama stories.)

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