Republican Congress

Wall Street gets its gridlock wish; how soon till they regret it?

November 3, 2010: 1:12 PM ET

Financial pundits were for gridlock, until they were against it. Why? There's limited data, but historians think it might be the worst possible kind for the markets.

By Mina Kimes, writer

Gridlock has come to the Hill--but will it benefit stocks? Earlier in the summer, market pundits came out in favor of a split Congress, arguing that a disempowered government would leave business alone and eliminate regulatory uncertainty. In recent days, though, investor sentiment has turned against gridlock, with many citing an S&P study that shows that stocks actually perform better during times of unity, not division.

But a closer look at the study reveals that the current situation--a Democratic president and a split Congress--is unprecedented, at least since 1900. As a result, the government is about to enter a state of gridlock that the market has never seen before. More

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