Source: JPMorgan US Equity Research
"Our central election expectation continues to be that Sec. Clinton wins the White House, with a slim Democratic majority in the Senate — quite possibly a 50-50 split with the vice president breaking the tie — and a somewhat smaller Republican majority in the House than the 246 seats they currently hold," Goldman economist Alec Phillips said in a Monday note, which did not provide expectations on the market reaction to an election outcome.
"With tight polling in several states, it looks quite possible that a final outcome in the presidential race might not become clear until early on November 9," the note said. "The same holds true in the Senate races, where a delayed outcome in one seat could keep either party from winning an outright majority on election night."
The S&P 500 could potentially fall 11 to 13 percent if Trump wins the election, Keith Parker, global equity strategist, said in a Nov. 1 note. If Clinton wins, the index could rise 2 to 3 percent.
"We see the U.S. election as first: a risk-off/on event initially that has the greatest effect on equities/rates given the uncertainty," he said. "Second, a macro event that (affects) currencies and to a lesser extent commodities; lastly, a micro event that (affects) a number of industries but one that will play out over time as agendas are implemented."
After the Oct. 28 market reaction to news about a new FBI probe into Clinton's emails, Barclays found that health care could underperform by 2 to 3 percent if Clinton wins.
Other notable stock reactions that day included weakness in trade-related equities such as railroads, trucking and air freight, particularly railroad Kansas City Southern, which Barclays said has the highest sales to Mexico in the S&P.
"The tail risks of a Trump victory or a Democratic 'sweep' could result in a market correction in the 5 percent range (similar to Brexit), after which the investment community reassess the environment," Chief U.S. Equity Strategist Tobias Levkovich said in a Nov. 3 note.
Regardless of which candidate wins, Levkovich expects consumer discretionary, energy, financials — especially regional banks — and technology stocks to generally perform well. Materials and real estate should also do well if Trump prevails, according to Levkovich's analysis. US sector recommendations
Notes: 1) Multinational trade issues 2) Defense budget trade impact 3) Clinton does not have a real estate background 4) Environmental issues.
Source: Citi Research - US Equity Strategy
However, more market weakness could arise if no candidate gets the needed 270 electoral college votes or if Clinton wins and Trump does not concede, Levkovich said in the note.
The S&P 500 fell more than 5 percent from election day on Nov. 7, 2000, to the Supreme Court decision on Dec. 12 that year deciding a contested vote in George W. Bush's favor.
"The worst-case scenario is we don't have decision on Tuesday," said Brian Belski, chief investment strategist at BMO Capital Markets.
He said a Trump win would likely result in "jittery" markets, and while markets would likely be "happy" with a Clinton victory, questions around the political implications of the election for markets would linger for several months.
Note: R: Republican, D: Democrat.
Source: BMO Investment Strategy Group.
Election outcomes and sector reactions
"Our base case is a divided government limiting policy action to incremental tax changes and infrastructure spending," analysts from Morgan Stanley's fixed income strategist team led by Michael Zezas said in a Nov. 1 note.