Gridlock Congress, Catapulting Stocks

By Timothy Sykes

Last updated on February 2, 2021
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Stocks are still riding the post-election wave…

Leading up to the election, the Dow had some of its biggest losing days in months. After Election Day, the markets eased up and could reach major highs once again.

The S&P 500 rose 1.9% today and is on track for its biggest weekly gain since April.

At writing, NBC News reports Joe Biden leads Donald Trump 253 to 214.

Regardless of who wins, the next president will likely inherit a divided congress — and markets are banking on it.

A gridlocked Congress occurs when the House of Representatives and the Senate are controlled by different parties, or the president is in a different party.

The last time Congress looked similar to the one we could end up with in a Biden win scenario was from 2001–2003, when President George Bush was dealt a Republican House and a Democratic Senate. Over those two years, the Dow lost 20% and the Nasdaq was cut in half, but this was also right after the 2000 tech bubble burst.

Right now, we’re seeing big tech names like Facebook and Amazon catapulting upward because a split Congress could mean these companies will avoid greater regulatory scrutiny. Healthcare stocks are also jumping because of the reduced likelihood of any drug pricing reforms.

With all eyes on battleground vote counts, the nation anxiously watches and waits.

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Comments (1)
Author imageTimothy Sykes
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