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Democratic President + GOP Congress = Major Stock Market Gains Next Year?


"History doesn’t usually repeat, but it often rhymes."

Traders work the floor of the New York Stock Exchange after the opening bell on June 20, 2013 in New York City. (Photo by John Moore/Getty Images)

Republicans gave Democrats a severe walloping Tuesday night, seizing control of the Senate and picking up seats in the House of Representatives.

What could that mean for the stock market?

As Business Insider's Sam Ro pointed out earlier this week, the last time the GOP seized both house of Congress while a Democratic president was in office, stocks soared the next year.

Image via Business Insider Image via Business Insider

Markets could be in for a repeat of the mid-'90s boom.

Some have noted a connection between political gridlock and strong markets (perhaps because investors feel more certainty in economic conditions if they know government won't be able to agree on things and radically shake up the regulatory landscape), and with Congress in the hands of the GOP and the White House occupied by a Democrat, that market-approved gridlock could prevail over the next two years.

Here's how Ro said UBS strategist Julian Emmanuel drew the comparison between the mid-90s and the mid-2010s on Monday:

[Newt] Gingrich and the 'Republican Revolution' steamroll Clinton & Co. in 1994's midterms. Markets pause, hesitate, then begin a bull run in 1995. History doesn’t usually repeat, but it often rhymes.

As of 10 a.m. EST on Wednesday, the NASDAQ was trending down a bit...

Image via Google Finance Image via Google Finance

...while the S&P 500 had ticked upward.

Image via Google Finance Image via Google Finance

Follow Zach Noble (@thezachnoble) on Twitter

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