By Hao Li: Subscribe to Hao's RSS feed
September 10, 2010 6:18 PM EDT
Thirty-nine out of 100 Senate seats and all of the House of Representatives seats will be contested in the November 2010 mid-term elections. Partly due to discontent about the poor state of the U.S. economy, Republicans are expected to gain enough seats to at least cause a gridlock.
Analysts see a gridlock as more positive for the stock market compared to the current composition of the Congress. For Peter Boockvar, equity strategist at Miller Tabak, a gridlock would hamper the anti-business policies of the Obama administration in areas like taxes, health care, and public debt.
Jason Pride, director of investment strategy at Glenmede in Philadelphia, said historically, the market and economy have performed well during gridlocks. The best macroeconomic pieces of legislation tend to come from these periods because Democrats and Republicans had to work together and were unable to pass one-sided policies.
Follow us
Pride said Obama's healthcare program is an example of a rather extreme and radical legislation -- which is currently unpopular and probably not business-friendly -- that a lopsided Congress passed.
In addition, some perceive Obama and the current Congress as anti-business, so any change in the status quo of the Congress may be viewed as positive for the market, said Pride.
However, come November, if the Republicans do gain some seats, the market may not react too much because that's already expected and priced in, said Paul Nolte, managing director at Dearborn Partners. In fact, one reason why this September -- a traditionally poor month for the stock market -- started off well is because of the expected Republican victories.
However, if the Republicans unexpectedly gain enough seats to be able to override Obama's presidential vetoes, then market may react more positively, said Nolte.
The mid-term elections, however, are just part of the political equation for the markets, said Boockvar. He sees decisions on taxes -- namely those on income, capital gains, and dividends -- as having a more direct impact on both the economy and the stock market.
Mark Zuckerberg's $6.4 Billion Loss: Value Of Facebook CEO's Stake A Gambler's Nightmare
Tasha Reign Says ‘Super Hot’ Bill Clinton Wanted To Meet Her and Brooklyn Lee, ‘Sympathetic’ For Viral Photo
Larry Flynt Blasts ‘Prudish And Delusional Right Wing’ Over S.E. Cupp Hustler Photo As ‘The View’ Hosts Jump To The Defense
Joe Biden Says He Understood Suicidal Thoughts In Wrenching Speech To Families Of Fallen Troops
US Cities with Most Underwater Mortgage [SLIDESHOW]We value your privacy. Your email address will not be shared.
