Lack of Presidential Race Decision and Prospect for Divided Government Not Cause for Wall Street Panic
While any sort of political uncertainty is almost always a bad thing for business in general and Wall Street in particular, a statement issued by the respected Moody’s Investors Service is suggesting that a delayed result in the presidential election is nothing to get excited about.
A note issued by a Moody’s spokesperson asserted that “while the lack of an immediate conclusion to the election process may increase financial market volatility, our assumption is that US institutions will eventually resolve the delays in vote counting.”
The statement adds that Moody’s expects imminent disputes over the results of the election to be handled in a “manner that is consistent with the established frameworks around the rule of law without causing any meaningful, enduring credit impact.”
The Moody’s release comes as counting in five states - Alaska, Georgia, Nevada, North Carolina, and Pennsylvania - remain incomplete, depriving both President Trump and former vice-president Joseph Biden of an electoral majority.
Despite some market trepidation, investor activity since the end of voting on Tuesday has been largely positive, with the Dow closing up by more than 1.3% on the day after the balloting, and the Standard and Poor’s Index increasing by 2.2%.
That S&P increase was the largest one-day gain in five months.
Some analysts even suggest that the prospect of a Biden presidency with the Senate still in the hands of the Republicans was being viewed as a good thing. “It’s unlikely that Mr. Biden will be able to get his planned corporate tax hike through,” reports the Wall Street Journal, speculating on the probability of a divided government.
“Stock market investors often prefer gridlock,” agrees the Investor’s Business Daily.
Taking note of the very close results and the potential for one party being in control of the White House and another of the Senate, Thaddeus Swank, an editor with the U.C. Chamber of Commerce’s strategic communications, wrote: “Overall, this election shows that the American people want and expect cooperation when Congress convenes in January.”
“And that’s good,” Swank added, “because we have lots of work to do.”
By Garry Boulard
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