Election day has finally arrived and while the true make-up of the next Congress won’t be revealed until Wednesday, Republicans are optimistic they will win the 39 seats that will guarantee a takeover of the House. Republicans gaining control of the Senate, however, looks far less likely.
What can be expected with a Republican-controlled House is two years of legislative gridlock. But Doug Roberts, chief investment strategist for Channel Capital Research, says gridlock will be positive for the markets because “the fear of regulation is going to recede,” and therefore the markets will “see no threats,” particularly when it comes to the health care sector. While it’s unlikely Republicans will be able to repeal healthcare reform, they will do their best to “defund” certain parts of the new law, Roberts says.
On the Senate side, Majority Leader Harry Reid, D-Nev., faces a very tough re-election on Tuesday as investors there worry about the poor condition of the state's economy. Jeff Kleintop (left), chief market strategist for LPL Financial, says the economy in the Southwestern states remains weaker than in other parts of the country. Nevada, Kleintop notes, “has not yet emerged from recession.”