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Power Play: Makeup of Congress and your portfolio

A U.S. flag on a vehicle flutters as the sun sets behind the U.S. Capitol dome in the hours before President Barack Obama delivers the State of the Union address to a joint session of Congress in Washington January 12, 2016.
Jonathan Ernst | Reuters

While the U.S. presidential race is getting the bulk of the media coverage, what actually determines market returns this year is the make-up of Congress.

Gina Martin Adams, institutional equity strategist at Wells Fargo Securities, tells CNBC's "Power Lunch" on Tuesday a Democratic President and Republican or split Congress appears most likely in 2017.

"This mix happens to be the least represented in U.S. history. Interestingly, there has not been a new Democratic President elected to office without a Democratic-controlled Congress since 1885, when Grover Cleveland was elected," Adams said.

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She points out that in 1997, when a Democrat and Republican Congress shares power in Washington, stocks offered a 31 percent return , but the outcome is mixed with a split Congress. "The two times a Democrat in the White House started off their term with a split Congress resulted in very different experiences. In 2013, stocks posted a 29.6 percent gain, but in 1917, stocks fell 30.6 percent," Adams said.

The most market friendly outcome is having the same political party control both the presidency and Congress.

"Since 1901, Republican Presidents with Republican congresses have averaged the highest annual first-year returns of 7.9 percent, with positive returns 75 percent of the time. Democratic Presidents with Democratic Congresses have averaged annual returns of 6.2 percent with positive returns 64 percent of the time," Adams said.

In the current environment, Adams is recommending an overweight to industrials and telecom and an underweight to utilities and financials. Industrials, telecom, utilities and financials are higher during trading.