Wall Street is usually watching the Alabama Senate race along with the rest of the U.S., wondering how which could affect tax cuts in addition to the Republican agenda.
The close race pits Republican Roy Moore against Democrat Doug Jones. Polls have mostly shown a slim lead for Moore, however which’s unclear how much support he will get via some groups within the Republican Party which may be unwilling to overlook allegations against Moore of sexual misconduct with teenagers.
While President Donald Trump in addition to the Republican National Committee have urged Alabamans to vote for the GOP candidate, some Republicans have spoken against Moore, including former Secretary of State Condoleezza Rice in addition to Alabama Sen. Richard Shelby, who said he could not vote for him.
“A win by Jones could shrink the GOP Senate margin to 59-41, creating which virtually impossible for [Senate Majority leader] Mitch McConnell to get much done next year,” writes Greg Valliere, chief global strategist at Horizon Investments. “Why? Because GOP mavericks Susan Collins, Bob Corker in addition to others are likely to stray, knowing which their votes will be even more important using a reduced Republican majority.”
Stock prices have gotten a boost via just the idea of tax reform, mostly inside past month as both the House in addition to Senate approved versions of the bill which are at which point being worked out in conference.
“I think which most investors are probably hoping which the outcome will not adversely impact the tax vote,” said Sam Stovall, chief market strategist at CFTA. “I think Wall Street is usually hoping the tax bill passes in addition to believes there’s a greater likelihood if which Senate seat stays Republican.”
Stovall said if Moore loses, which could pressure stocks. “Without the tax cut, I think stocks are overvalued by 10 to 15 percent,” he said. Tax legislation is usually supposed to be ready for a vote before Congress breaks for the holidays — too soon for the brand-new Alabama senator to vote.
Republicans expect to bring the tax plan to a vote on Dec. 22 (before the next senator could be seated), “though we’ve seen such dates slip inside past,” wrote Ian Lyngen, head of U.S. rates strategy at BMO. “Rather than broader in addition to more grandiose conclusions about the shape of the 2018 midterms, markets may have to simply settle on what which race means for legislation inside coming months.”
The polls will close in Alabama at 8 p.m. ET.
A loss by Moore could also be a message via voters in a pro-Trump state which Republicans may face a difficult time inside 2018 midterms.
“Donald Trump’s base seems to be a little less firm at which point, in addition to if which’s wavering even in Alabama, there are implications nationwide,” notes Valliere. “If Moore loses, GOP leaders will blame the disastrous influence of Steve Bannon, in addition to they will worry which the sexual harassment issue is usually a raging fire which threatens to engulf even Trump.”
Brown Brothers Harriman chief currency strategist Marc Chandler said he does not expect a big market impact if Jones wins. He also said which may not matter if the Republicans lose one of the houses of Congress next year.
“I don’t think which actually alterations anything,” he said. “The big problem is usually not between Republicans in addition to Democrats, which’s between Republicans.”