Wall Street Rallies on News That Washington Will Get Nothing Done for Two Years

NEW YORK — Stock futures rose sharply Wednesday morning after Democrats won control of both the House and the Senate, and the reason, strategists said, was that Washington will now find it very hard to do anything at all.

Futures tied to the Dow Jones Industrial Average jumped 803 points, or 1.5 percent, CNBC reported. S&P 500 futures traded 1 percent higher and Nasdaq-100 futures gained 0.5 percent. That was a full reversal from overnight, when U.S. stock futures had fallen by as much as 2 percent, Reuters reported.

This reporter was awake for all of it. I set my alarm for 4 a.m., as always, and by 4:01 a.m. I had already identified the opportunity. The opportunity was gridlock.

The gridlock trade

“There will be gridlock and historically this is good for the market,” Jay Woods, chief market strategist at Freedom Capital Markets, told CNBC.

Andrew Slimmon of Morgan Stanley Investment Management told CNBC that markets “like gridlock — they don’t like a party with too much power.”

Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes, told Reuters that a divided government “typically creates a blockade against new legislation — an environment which broad financial markets traditionally view favourably as variables decrease.”

I have read that sentence nine times. Fewer variables. Fewer laws. A government that cannot pass anything. For an investor, that is the dream. For a podcast host with two listeners, both of them me, it is also the dream.

What moved

Renewable energy and health care stocks led the premarket. First Solar rose 8.5 percent and Plug Power gained 10.6 percent, while Molina Healthcare added 6.3 percent, CNBC reported. Spot gold climbed 2.93 percent to $4,043.45 an ounce. Defense stocks fell on both sides of the Atlantic, Reuters reported.

Shares of Tesla and SpaceX were down around 4.5 to 5 percent in premarket trading, according to Reuters. I consider this a discount. So is my crypto portfolio, which is down 98 percent and therefore 98 percent on sale.

President Donald Trump also helped, one strategist said. “We’ll work with the Democrats, and we’ll get along very well with them,” Trump told the Wall Street Journal, according to CNBC. Woods said the rebound was “in part due to the president’s initial tone and reaction to the results.”

The outlook

Every chart I own points up. Gridlock is up. Gold is up. My conviction is up. The only thing that went down this morning was the overnight futures market, and it came back before my second coffee.

My position is simple. Congress will spend two years getting nothing done, and I am buying all of it.