The Dow Jones Industrial Average is down over 500 points since the surprise election of Republican Scott Brown in a special election to fill the late Ted Kennedy’s Senate seat. The election surprised many pundits and Democrats alike who viewed this as a safe seat. Brown defeated Democratic nominee and Attorney General Martha Coakley. Despite early large leads in the polls, Coakley lost ground and was overtaken by Brown in the weeks prior to the special election. Republicans have hailed the Brown victory as a rebuking of the national Democratic agenda.
However, since the election of Brown, U.S. stock markets have seen some of the sharpest 1-day declines in recent months. The sharp declines began on Wednesday, the first trading-day after the results were known. On Friday alone, the major U.S. indexes all posted declines of over 2%. While reactions are mixed, there is growing talk that a Brown victory may not bode well for investors.
"I think it is a sign that investors are wary of Republicans breaking up the Democratic super-majority. There’s a lot of uncertainty right now, and the markets are wary that Republicans may now be able block even more legislation," said an unnamed investment bank CEO.
"It may be a signal that the tea-bag element is ascending, and I think most investors don’t want that right now... or ever for that matter," said a ranking stock market analyst. "You can’t help but look back to the last 8 years and hear an eerie voice saying, "Theyyyyyy’re baaaack!""
Republicans and conservatives were quick to downplay this talk. "The stock market is uncorrelated to day-to-day politics," declared Larry Kudlow of CNBC. "The stock market is far too big and diversified to move on small political events, and the media is far too quick to give an credence to those who say it does."
"Nazi’s, socialists, and ACORN have purposely tanked the markets in order to create a perception of fear," remarked Ann Coulter. "And, oh shit, I forgot to mention Soros didn’t I? Make sure to put that in there."
"Whatever you think about the Brown victory, what is undeniable is that this is really, really, great news for John McCain," remarked Charles Krauthammer.
Whatever the causes, investors are limping into the weekend. Some are cautiously optimistic that Democrats might get their act together now that the 60-vote supermajority is off the table.
/snark
UPDATE: snark background from Media Matters:
It's Day Two of the Scott Brown Era (at least that's how cablers continue to over-cover the Mass. story), and yet still no "gigantic" stock market rally, as predicted by CNBC's Jim Cramer. In fact, just like yesterday, investors (surprise!) seem quite non-plussed by Brown's win, and for the second straight day stocks are down significantly.
Just poking little fun of pundits who always use the stock market to blast Democrats when it goes down, but only praise Republicans when it goes up.