Ed Yardeni of Yardeni Research said a blue wave could deliver a cold shower for stocks, though he would treat a significant selloff as a buying opportunity. Analysts say gridlock has historically been good for markets, and a Democratic win in Congress could raise shutdown odds in early 2027.
Ed Yardeni of Yardeni Research said a blue wave could deliver a cold shower for stocks. He added that he would view a significant selloff as a buying opportunity, given the strength of the economy and corporate earnings.
Analysts say political gridlock has historically been good for markets because it limits Congress' ability to pass sweeping tax and spending legislation. That limit reduces the risk of volatility, they say.
Yardeni warned that deepening partisanship could turn gridlock into damaging political paralysis. He said prolonged shutdowns and fiscal standoffs could push Treasury yields higher, weighing on equity valuations.
If Democrats retake one or both houses of Congress, the odds of a government shutdown go up in the first half of 2027. That is when the debt ceiling is next projected to be reached.
