EDITOR'S NOTE

Wall Street will ask for just one thing next week: clarity.

The U.S. presidential election will take place on Tuesday and investors hope there will be a clear-cut winner from the vote, thus removing the uncertainty of a contested — or delayed — election result, writes CNBC’s Patti Domm.

“If there’s no clear winner, it will be negative for risk assets...The market is really worried about not having clarity after the election. They’re worried about it dragging out for weeks as the results are contested,” said Ian Lyngen, head of U.S. rates strategy at BMO.

Wall Street is also concerned about the outcome of several Senate races. Some investors believe that a “Blue Wave” — a scenario in which the Democrats win the White House, obtain a Senate majority and retain control of the House — would be market positive because it would facilitate the passing of a much-needed big fiscal stimulus.

Democrats and Republicans failed this week to move forward with a new fiscal aid package before the election, pressuring the broader stock market along with a recent rise in coronavirus cases.

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all posted on Friday their biggest weekly declines since March. They also fell for a second straight month as the daily average rate of new U.S. coronavirus cases hit an all-time high.

“There is growing concern in the U.S. that restrictions may also be necessary, as case counts have increased along with hospitalization rates,” said Katie Nixon, CIO at Northern Trust Wealth Management. “Whether the restrictions are mandated or simply the behavioral reaction of consumers to rising cases, this presents a notable economic headwind.”

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