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Why does the stock market crave a GOP victory?
Gridlock in Washington may be just what investors have been waiting for, says Costas Panagopoulos in The Christian Science Monitor
 
The Dow rose 19.5 percent, nearly three times as fast, per year when Democratic presidents faced a GOP-controlled House.
The Dow rose 19.5 percent, nearly three times as fast, per year when Democratic presidents faced a GOP-controlled House.
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Many Democrats are distraught over the likelihood of losing the House in Tuesday's elections, says Costas Panagopoulos in The Christian Science Monitor. But they might find solace in hearing that the stock market has done twice as well in recent decades when power was split in D.C. Here, an excerpt:

So why does the stock market like a divided government? One explanation... may be that Wall Street favors the slower pace and compromises that typify lawmaking during episodes of divided government. Stability and less precipitous shifts in public policy are preferable to investors and Wall Street. Gridlock in Congress may not be ideal in many respects, but it does mean that lawmakers will devote adequate time to thinking bills through and to making deals that yield legislation that is less extreme.

Whatever the cause, the historical patterns suggest Republicans' gaining control of Congress in 2010 would probably stimulate stock performance in the short term.

Read the full article in The Christian Science Monitor.

 

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