Attributing stock market moves to political processes is a dicey proposition at best. That does not seem to deter either the right or left, who are always quick to jump on any day to day fluctuation in the market as either a validation or refutation of a particular policy in the news.
That said, it is undeniable that what happens in Washington D.C. does have a profound effect on Wall Street. A recurring sentiment expressed in financial print and broadcast media is that markets love gridlock and divided government. Whether or not a correlation can be statistically proven to be true, it is in the nature of markets that if a preponderance of the investor class believes a correlation to be true, then it is true. At least, for a period of time as a self fulfilling prophecy.
In what has evolved into an annual post, DWSUWF has reported on this recurring theme in 2006 (and again), 2007, 2008 and now 2009. This latest entry is from CNBC "Squawk Box" last week. It starts as a health care discussion but tacks in another direction:
"Airtime: Fri. Aug. 28 2009 | 5:10 AM ETInteresting to note that the meme is consistent regardless of whether we have Republican or Democratic single party rule in place.
Tony Crescenzi, of Pimco, and Jim Iuorio, of TJM Institutional Services, share their thoughts on health care reform."