Source: US Dept. of Treasury End of Day
Investors welcomed back gridlock with open arms. Thanks to a powerful post-election rally that built on the gains leading up to the election, the Dow Jones Industrial average has clawed back almost 65 percent of the outsized losses incurred in October. Even with Friday’s modest setback, the Dow stood only about 3.0 percent below its October 3 record high by the end of the week. It seems that participants are pleased with the prospect that sweeping legislative changes will not be forthcoming in the near future, as a divided and highly polarized Congress should put the kibosh on bold policy initiatives pushed by either Democrats or Republicans. With a Goldilocks economy unfolding, investors are understandably loath to have anything rock the boat, something that Washington is fully equipped to deliver with untimely meddling.
