In a recent MarketWatch article, contributor Mark Hulbert argues that U.S. equities have performed best when political power is divided.

According to Hulbert, “it is increasingly looking as though gridlock is a winner,” citing the following historical data:

“The likely reason that Wall Street likes gridlock,” Hulbert writes, “is that it reduces the possibility that any major policy changes will take effect.” He cites comments from CFRA chief investment strategist Sam Stovall, who told clients that gridlock “lessens the prospects for an increase in regulations and taxes” as well as the likelihood of “additional fiscal stimulus” which, in turn, eases potential inflationary pressures down the road.

Hulbert is careful to point out, however, that the above data shouldn’t be given “undue importance” noting that Fed chairman Jerome Powell will “remain the most powerful man in Washington regardless of who wins the presidency or controls the Senate.” In conclusion, he reminds readers that most of the stock market’s fluctuations are “statistical noise.”