Wall St Edgy Over Democrat Victory

The re-election of President Bill Clinton is viewed as a foregone conclusion; and since Clinton has presided over the bull market of the last two years, more of the same is just what the markets want.

But this desirable continuity could be broken if, as a growing number of observers now believe possible, the Democrats not only hold on to the presidency but also wrest both houses of Congress from Republican control. Such a change could be felt not only in the stock and bond markets, but also in policy issues affecting the financial industry. So far, the markets are largely ignoring this threat, either because they think the swing will not happen or will not matter.

 

But market strategists have begun to highlight the dangers. A scenario in which the House and/or the Senate reverts to Democratic control would probably provoke a knee-jerk reaction in the stock and bond markets, wrote Charles Gabriel at Prudential Securities.