Sully: How the election outcome will impact the stock market

With the 2020 election less than two months away, Wall Street investors are weighing the pros and cons of a Trump versus Biden presidency.

The stock market’s reaction to the presidential election will depend on which party ends up with control of the Senate and House of Representatives.

Here’s what happens to markets under various election scenarios, including delayed results, according to KUSI Contributor Sully Sullivan.

Scenario 1: Status Quo

If Trump wins, Republicans hold the Senate and Democrats remain in control of the House, then markets will likely rally 3% to 5% on “no new news,” predicts wealth management firm Hightower Advisors.

The market initially jumped after Trump first won the 2016 election. He pushed through corporate tax cuts and relaxed business regulations.

Scenario 2: Blue Wave

If Biden wins, Democrats take control of the Senate and retain the House then the market will likely see an initial sell-off of between 2% to 5%.

Scenario 3: Delayed Election Results

The worst outcome for the stock market is delayed or disputed election results.

Several factors could lead to contested results, especially given the rise in mail-in ballots as the coronavirus keeps many people from voting in-person.

The last time presidential election results were held up was in 2000, when votes were so tight in Florida that a recount was initiated by the state.

The election wasn’t fully decided until a Supreme Court decision on December 12, five weeks after Americans cast their vote.

Meanwhile, the S&P 500 plunged nearly 10% and the Nasdaq plummeted roughly 20% by the end of November.

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