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New York
CNN Business
—
Wall Street was betting on a red wave in the midterm elections Tuesday. But so far it appears that didn’t necessarily happen. And now investors are seeing red on their trading screens Wednesday morning.
Stocks dipped modestly after the opening bell, with the Dow sliding nearly 200 points, or 0.6%. The S&P 500 and Nasdaq fell 0.7% and 0.9% respectively.
The market had rallied the past three days, following a historic surge for stocks in October. That was due in part to expectations of a convincing victory for Republicans that could give the party control of one or both chambers of Congress — a development that could lead to more investor-friendly gridlock.
But it’s not yet clear if Democrats will actually lose their majority in either chamber.
“The market expected a different outcome. There may be disappointment among investors that there won’t be a more robust check on the Biden administration,” said Brian Gardner, chief Washington policy strategist with Stifel. “There will still be gridlock, but there is confusion and a lack of clarity.”
Gardner said the chance of any meaningful new stimulus bills getting passed between now and the 2024 presidential elections are “very slim” -— even if the economy slips into a recession. The best that the market might be able to hope for is that Washington can pass a federal budget and steer clear of more drama about lifting the debt ceiling.
“The two parties don’t see it in their best interest to cooperate with the other side,” Gardner said.
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