Wall Street investors are spending the most time preparing for a potential red wave on Election Day, the outcome they see as most likely to cause major changes in the economy.
Investors told the New York Times that they expect to see a similar economic effect to that of 2016 if former President Trump wins the White House and Republicans take control of Congress.
"I think directionally you will see something that rhymes with it," Erik Weisman, chief economist and a portfolio manager at MFS Investment Management, told the Times.
A blue wave, meanwhile is seen as "less likely," according to investors. Wall Street nevertheless predicts that a widespread Democratic victory could result in more government spending and higher borrowing costs, according to the Times.
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A red wave is seen to be the option that is by far most likely to cause major changes in financial markets, however. The third option, a divided Congress and White House of any combination, is not expected to cause many changes to the market at all.
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"What is going to matter is a red wave or not," Mike Gladchun, an associate portfolio manager at the fund manager Loomis Sayles, told the paper.
Polls show Trump has a slight lead over Biden in many battleground states. Trump is more dominant when it comes to the issues, with large majorities of Americans saying he is more capable of handling the economy and illegal immigration, two top issues for Americans this election cycle.
Biden trails Trump by 23 points when voters were asked who would be a better candidate to handle the economy, according to the results of a national NBC News poll released earlier this month.
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Trump also boasts large leads over Biden when it comes to securing the border (+35 points), having the necessary mental and physical health to be president (+23), on dealing with crime and violence (+21). The former president also has double-digit leads over Biden when it comes to being competitive and effective (+16) and on improving America's standing in the world (+11).
Fox News' Michael Lee contributed to this report
