Will the election give bank stocks a lift?

Tuesday’s election results could be the boost to bank stocks that investors have been waiting for.

With Republicans holding the Senate and Democrats taking control of the House, investment analysts are not expecting much to happen in Washington over the next two years that could add to banks’ regulatory burden and, in turn, put pressure on their stock prices.

“If you want GSE reform, if you want regulatory rollbacks, if you want CFPB reform, it’s just going to be full gridlock for the next two years,” said Henrietta Treyz, the director of economic policy research at Veda Partners in Bethesda, Md.

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Though banks have received substantial regulatory relief from a Republican-controlled Congress, their stock prices have slumped for much of the year due to weak loan demand and rising expenses.

And while the election won’t do much to stimulate loan growth, it did remove the threat of Democrats taking control of both chambers and potentially trying to halt Republicans’ efforts to ease regulations.

“Gridlock is better than repealing everything that’s been done so far,” said Marty Mosby, an analyst at Vining Sparks.

The election results combined with the recent rise in the 10-year Treasury and other long-term rates, as well as banks’ solid financial results from the third quarter, are creating an environment in which bank stocks could flourish, Mosby added.

“This summer, there was concern that we were going into a recession and everyone started to pull back” from bank stocks, Mosby said. “Now that we’ve gotten past the election, we see it’s likely there’s going to be some stability.”

Early indicators show that investors may be feeling a bit more optimistic.

The stocks of many major banks, including Bank of America, Citigroup and JPMorgan Chase were all up slightly in late trading Wednesday. The KBW Bank Index, an index of large and regional bank stocks, has declined by more than 6% since mid-September but was up 0.4% late Wednesday.

In a Wednesday morning research note, Brian Gardner, an analyst at Keefe, Bruyette & Woods, wrote that with Democrats only holding a majority of about 20 seats in the House, Rep. Maxine Waters, D-Calif., the likely incoming chair of the House Financial Services Committee, probably won’t be looking to impose new restrictions on large banks.

Instead, she will more likely prioritize legislation that could gain bipartisan support, such as flood insurance, the reauthorization of the Export-Import Bank and more oversight of credit reporting bureaus, Gardner said.

Finally, bank stocks could be lifted as the entire market is likely to surge, said David Joy, the chief market strategist at Ameriprise Financial. Based on historic trends, markets tend to rise immediately after elections and the U.S. economy’s relative strength should allow that to happen, he said.

“It’s widely assumed that stocks will rally after the midterms,” Joy said. “A major source of uncertainty is removed.”

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