Unknown Election Outcome Is Stocks’ Big Fear
In two southern matchups - Louisiana and Georgia - polls show the races are too tight to call, raising the potential for run-off elections that could delay for weeks knowing who will control Congress’ upper chamber. Louisiana’s run-off election is scheduled for Dec. 6. In the market’s worst-case scenario, the majority party may not be known until after Jan. 6, when Georgia will hold its run-off election if no Senate candidate wins at least 50 percent of the vote on Nov. 4.
Such an outcome, while considered unlikely, nevertheless rekindles uncomfortable memories for some of the 2000 presidential election, when George W. Bush’s victory over Al Gore was not confirmed for more than a month after Election Day. That uncertainty contributed to a spike of almost 11.2 percent in the CBOE Volatility index .VIX and a 7.6 percent drop in the S&P 500 .SPX from Election Day through the Electoral College vote in late December that certified the outcome.