A more divided Congress following the Nov. 6 midterm elections means that both parties will have to cooperate more to get anything done, including retirement legislation.
The biggest change was shifting power in the House of Representatives. Although some races were still being counted the House, as of midday Nov. 9, will have 225 Democrats and 197 Republicans when the 116th Congress begins in January.
Senate Republicans solidified their majority, although a final count was still undetermined as of midday Nov. 9, and there will be a special runoff election in Mississippi on Nov. 27 because neither candidate received a majority of votes to replace Republican Sen. Thad Cochran.
The key number is the 60 votes they will need to break any filibusters.
For the markets, "maybe this is the just-right outcome" with shared power, said Brian Nick, chief investment strategist for Nuveen in New York, who added that few people expected candidates to get into specific policy proposals now or going forward.
"Our view coming into this was that there wasn't going to be a whole lot of legislating in 2018 and 2019," Mr. Nick said.
With a Democratic majority in the House and a Republican majority in the Senate, "it's almost tied the hands of the new Congress," Mr. Nick said.
"There's only so much appetite" for big ideas, including how to deal with unchecked federal debt, he said.
The debt "is the first question I get. It is certainly an anxiety," Mr. Nick said. "We need to raise the debt ceiling next year, and pass budgets. Given that we are looking at a divided Congress, it could be more brinksmanship."
As the tax-cut stimulus starts to wear off after 2019, "this could be the first (Congress) in a long time that is going to be in session during an economic slowdown. Does that become the impetus for an economic stimulus package?" Mr. Nick asked.