With market volatility rising ahead of November’s U.S. presidential and Congressional elections, investors are parsing what polls and policy proposals mean for everything from energy stocks to shares of private-prison operators. It is also driving moves in sectors that investors believe would benefit from control of the White House and Congress by one party or the other. Wall Street typically uses these sectors or other assets that would be impacted by different policies to build broad election baskets associated with each political party. Analysts then gauge the performance of those baskets over time to create probability forecasts of who they expect to win in November. Stock futures tumbled on election night in 2016 with investors concerned Mr. Trump’s victory would hurt corporate earnings because of his unpredictable policies and advocacy for barriers to trade.

Source: Wall Street Journal October 12, 2020 09:33 UTC