Here are the key election races Wall Street is watching as early indicators

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Congressional races in Indiana, Kentucky, Florida and Virginia will be among the first Wall Street is watching to see whether the electorate’s response to President Donald Trump’s programs is strong enough to launch either a ‘red wave’ of support or a ‘blue wave’ backlash.

The view of major firms like Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley is for a mixed outcome, with Democrats gaining control of the House and Republicans holding or even adding to their majority in the Senate. The market reaction to that scenario could be muted, but not so if there’s an upset, with either party staging a surprise victory and gaining total control of Congress.

Stocks could rally if there’s a GOP surge— or red wave — and some strategists see a sharp decline if Democrats over come the odds and take both the House and Senate.

Key early indicators of blue or red wave:

  • Kentucky — polls start closing at 6 p.m. ET
  • Indiana — polls start closing at 6 p.m. ET
  • Virginia — polls close at 7 p.m. ET
  • Florida — polls start closing at 7 p.m. ET

For that reason, investors are tuned in to the early races that can’t tell the whole story but could give clues to the broader outcome of the midterm elections. One of those races is being fought in the sixth district of Kentucky, where Amy McGrath, a retired Marine lieutenant colonel, is challenging GOP Rep. Andy Barr.

“It’s going to be one of the first races. Polls in Kentucky close at 6 p.m. If she wins, it’s very positive for Democrats. If he wins, it’s not hugely negative, but it’s not good for the Democrats. Kentucky is so Republican. This is in Lexington where the University of Kentucky is…There’s a liberal area of Lexington, but there’s the farm area outside. She was the first female marine fighter pilot,” said Tom Block, Fundstrat Washington policy strategist.

Block said he will also be focused on the Viriginia, where Rep. Scott Taylor is defending his seat in the second district against Elaine Luria, who like Taylor is a Navy veteran. In Virginia’s fifth district, Republican Denver Riggleman is running a close race against Democrat Leslie Cockburn for a seat vacated by Rep. Tom Garrett, who is retiring. A third Virginia House seat is up for grabs in the seventh district, where Rep. Dave Brat is running against former CIA operative Abigail Spanberger in a close race for a seat that has been in GOP hands for decades.

“Between Kentucky and the two or three Virginia races, if the Republicans are winning them all, it means they could hold the House,” said Block.

2018-11-06 20:36:00

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