Election Day is finally here and although everyone is anxiously waiting the results, the race is considered too close to call -- leaving investors a bit in limbo.
While the stock market typically does well no matter which party wins the election, a victory for Vice President Kamala Harris or former President Donald Trump can impact things in different ways.
"People are very concerned about this more than ever, because it's a really zero-one situation. Overall will affect the big economy. Not right away.
But specific sectors, absolutely," Andrew Busch, Economic Futurist and Economist at AndrewBusch.com, told WBBM's "Gains" podcast.
One factor causing uncertainty among investors is the stark difference between Trump and Harris' policies on a multitude of issues, including international trade and renewable energy.
But it's not only the presidency that matters. Financial markets will really be watching to see which party gains control of the House and Senate.
"We would likely need a more decisive outcome, meaning a sweep of the Presidency and both houses of Congress" to see a capital market impact, Rob Haworth, senior investment strategy director for U.S. Bank Asset Management, said in a statement. "It's difficult for the most significant policy proposals to take effect without one-party control, and that's when markets might become more reactive."
The more likely impact would be at the sector level, with certain industries benefiting from new policies while others may face more headwinds.
"A Republican victory would likely benefit the oil and gas lobbies, as well as cryptocurrency and bank stocks. Another beneficiary may be private prison operators, such as CoreCivic (CXW) or Geo Group (GEO), since Trump plans to attempt a massive deportation program that could impact millions of people," William Gavin reported for Quartz.
On the other hand, a win for Harris would likely benefit companies fighting climate change and building affordable houses, Gavin explained.
"She's pledged to invest $100 billion in companies working on artificial intelligence, semiconductor chips, and electric vehicles, among other things," he wrote. "Harris would also seek to raise taxes on corporations from 21% to 28%, which would weigh heavily on some companies. Her plans to take on high prescription drug prices would likely hit profit margins at firms like Pfizer (PFE) and Eli Lilly (LLY). A similar plan to ban price gauging at grocery stores might have similar effects on grocers."
While investors are certainly keeping a close eye on election results, other factors may have a greater impact on their portfolio.
"The historical data suggests that economic and inflation trends, more so than election outcomes, tend to have a stronger, more consistent relationship with market returns," US Bank pointed out. "In general, rising economic growth and falling inflation have been associated with returns that are considered above long-term averages, while falling growth and rising inflation have corresponded to positive but below average market returns."
Another major factor at play is the Federal Reserve views on interest rates in the coming years.
"If Republican candidate Donald Trump wins, growth could be faster, pushing up inflation. In that situation, the Fed would likely keep rates higher, especially if aggressive tariffs are enacted," Terry Lane reported for Investopedia. "A win by Democratic candidate Kamala Harris, who hasn't proposed the kinds of aggressive tax cuts or deregulation that Trump has, could lead to slower growth, potentially allowing the Fed to continue cutting rates."
In any event, Michael Angelucci of Level Financial Advisers says investors should try not to worry about whether it'll be a Democrat or Republican in the White House.
"I've got a graph that goes back the 1920s, and it shows every president and shows the market going up over those periods. Obviously, during the Great Depression, the markets went down. But since that point, almost every presidential period, whether it was a Democrat or Republican, it showed a positive market increase," Angelucci told WBEN.