“U.S. stocks were on course to open higher on Wednesday after the midterm elections handed Democrats the House of Representatives and saw Republicans reinforce their control of the Senate in a widely expected outcome,” Reuters reports. “Futures for the three major Wall Street indexes powered higher along with global stocks, while the dollar fell on fading hopes of further fiscal stimulus.”

“A Democrat-controlled House will hamper President Donald Trump’s pro-business agenda, but few worry about a reversal in already-enforced corporate tax cuts and deregulation measures that have played a large hand in the U.S. market’s rally since the 2016 election,” Reuters reports. “The results for the Republicans were no worse than feared and pointed to a political gridlock that was largely expected by investors, leaving them free to buy back into a market that had its worst month in seven years in October.”

“At 8:36 a.m. ET, Dow e-minis were up 165 points, or 0.64 percent. S&P 500 e-minis were up 20.75 points, or 0.75 percent and Nasdaq 100 e-minis were up 70 points, or 1 percent,” Reuters reports. “In a sign of appetite for risk, shares of high-growth technology and internet stocks, including Apple Inc and Amazon.com Inc, rose more than 1 percent in premarket trading.”

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“Along with gaining clarity on the midterm’s outcome, investors were bullish because they believe the Washington gridlock scenario will be best for the market,” Fred Imbert reports for CNBC. “History has also pointed to strong returns for equity markets when Congress is divided.”

“The Dow was up 3.7 percent for the year through Tuesday after an October sell-off leading up the election cut into its returns. Relief that Republicans held onto the Senate also helped boost stocks as some investors feared a so-called blue wave clamping down on Trump’s agenda,” Imbert reports. “Futures fell initially overnight as Democrats took their first seat back in the House and fears of a possible ‘blue wave’ increased… But then stock futures rebounded as more results started to come in.”

“Overall, stocks typically do well when Congress is split and the White House is under Republican control,” Imbert reports. “In those instances, the S&P 500 averages an annual return of 12 percent, according to Bank of America Merrill Lynch. ‘The best case scenario from here, in our view, might be gridlock: do nothing, and undo nothing,’ wrote Bank of America Merrill Lynch analysts and economists in a report leading up to the election.”

“This is the best buying opportunity for investors before year-end, said Phil Blancato, CEO of Ladenburg Thalmann Asset Management,” Imbert reports. “‘This is your entry point,’ he said, adding that positive seasonal factors, including strong holiday sales, should boost markets higher before the end of 2018.”

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MacDailyNews Take: Historically, Wall Street loves Washington gridlock because it minimizes uncertainty.