– This is the script of CNBC's news report for China's CCTV on October 20, Thursday.
Welcome to CNBC Business Daily, I'm Qian Chen.
The stock market is betting on an election outcome that could mean political inertia and more gains ahead.
If the stock market doesn't get its favorite election outcome this year, it may get its second best and that would be a scenario where no party holds Congress and the White House.
After the last debate, stocks were higher the next day, but that was also after a tape revealing lewd comments by Republican Donald Trump became public. The broader market appears to favor a Hillary Clinton win, but stocks could get hit if it looks like the Democrats will gain control of Congress. Biotech and health care stocks have been pressured by the view that Clinton will win the White House.
Meanwhile, biotech, candidate Clinton's political piñata, has sagged versus the Nasdaq. Biotechs slid eight percent relative to the Nasdaq since late September, reflecting Clinton's improving chances.
The investment markets concur. Since September 26th, the Mexican peso, a real time indicator of Trump's political prospects, rallied 6.6 percent against the U.S. dollar, reversing a 13 percent slide that commenced last April.
[Mary Meeker | Partner, Kleiner Perkins Caufield & Byers | San Francisco] "AND I ACTUALLY THINK THE DONALD TRUMP STUFF - IT HAS RAISED AN ISSUE MOST RECENTLY THAT IS REALLY IMPORTANT TO OUR SOCIETY AND IT HAS MADE THE DEBATE MUCH MORE INTENSE AND IT HAS MADE PEOPLE REFLECT A LOT MORE. SO I THINK WHEN WE GET THROUGH ALL THIS, I'M HOPEFUL WE'RE GOING TO END UP IN A BETTER SPACE."
The betting odds and polls show the House of Representatives remaining in Republican hands, but the market has reacted negatively to speculation that the Democrats could sweep Congress.
BMO Private Bank CIO Jack Ablin said the betting market is giving high odds to a Hillary Clinton win for the White House but also a Democratic Senate - the second best scenario for stocks. While that would be a Democratic president and a Democratic Senate, the odds on PredictIt.org and other sites favor the Republicans retaining control of the House of Representatives.
That would be a recipe for more gridlock in Washington, which the stock market typically likes.
Going back to 1900, the Dow tends to perform better under Democratic presidents, outpacing their Republican rivals 8.4 percent to 6.1 percent average annual price return. The Republicans have an investment edge in the Senate, however, outperforming the Democrats 8.1 percent to 6.5 percent. Of the four combinations of President and Senate, a Democratically-controlled White House matched up against a Republican Senate yields an 11.2 percent average annual return.
Meanwhile, some don't believe the eletion will have a lasting effect on the market.
[Goldman Sachs CEO Lloyd Blankfein | CNBC EXCLUSIVE] "WE'RE IN THE POLITICAL SEASON OF PEOPLE SAYING THINGS. TO GO OUT AND ARGUE IN A RATIONAL WAY SOME OF THE THINGS THAT ARE BEING SAID IS A WASTE OF TIME. IF THERE'S SOME SORT OF INTERNATIONAL KABALLA GROUP, I'M LEFT OUT OF THE PARTY."
CNBC Qian Chen, reporting from Singapore.