The stock market appears to be betting on a Clinton win with continued gridlock in Washington, D.C., which would mean a moderation of her policies.
Gregg, who is also the former governor of New Hampshire, is expecting a "gridlock-type situation." Therefore, the market will probably react positively, he added.
Gregg has said he will not vote for either Trump or Clinton.
Meanwhile, a handful of key swing states could determine the outcome of the presidential election.
Jared Bernstein, former economic advisor to Vice President Joe Biden, believes the best early indicators will be the outcomes in North Carolina, Florida, Pennsylvania and Ohio.
If Clinton wins two or three of those states, it will be a "very, very tough path for Donald Trump" and vice versa, "it'll be a long night," he told "Power Lunch."
He believes one of the key things is whether voters believe Hillary Clinton's narrative on the economy — that there are many positive economic indicators, but there are parts of the country the recovery hasn't reached — or Donald Trump's belief that the economy is a disaster.
Gregg thinks it comes down to American's confidence in the future.
"There's a real concern amongst the American people today about the direction of the country. The vast majority of Americans don't think we're headed in the right direction," he said. "That's why Donald Trump's doing well, and it's one of the factors that is going to play out, I think, very significantly in this vote."
— CNBC's John Schoen and Stefanie Kratter contributed to this report.