The stock market surged Monday, with investors expecting Hillary Clinton to defeat Donald Trump in Tuesday's presidential election — but financiers are also bracing for Republicans to retain at least the House of Representatives, meaning a divided government for at least two years.
The Dow Jones industrial average went up 371.32 points Monday, to close at 18,259.67; the S&P 500 went up 46.34 points, to close at 2,131.52; and the Nasdaq Composite Index went up 119.8 points, to close at 5,166.17. "This is mostly a political-relief rally," investment strategist Bruce McCain told CNBC. "The market tends to favor a divided-control scenario [in government] and this raises those odds."
Importantly, as frustrating as divided government can be for many people, the markets actually tend to like gridlock because it implies that current policies will basically stay in place. That means that after all the political shouting, investors will still have a predictable marketplace in which to do business.
The surge began right after FBI Director James Comey's letter was released Sunday, in which he informed lawmakers that the bureau is standing by its decision that no charges should be filed against Clinton over her handing of classified information on a private email server.
This ends a nine-day losing streak for the markets — which began when Comey initially announced on Oct. 28 that the FBI was reviewing more copies of Clinton's emails that had been found during a separate investigation into former Rep. Anthony Weiner (D-N.Y.), the estranged husband of longtime Clinton aide Huma Abedin. The announcement disrupted Clinton's steady lead in the polls, though recent surveys indicate she is still ahead.