What Wall St. Will Be Watching as the Votes Are Counted: Live Business Updates

For months, investors have signaled that their No. 1 desire is more federal spending to keep the economy afloat in the face a pandemic that is now rapidly expanding.

So when the election season culminates on Tuesday, the prospects for a stimulus bill are likely to influence how Wall Street reacts.

With that in mind, here are four electoral outcomes and how investors might view them.

The Blue Wave

The potential for this result — with former Vice President Joseph R. Biden Jr. winning the presidency decisively and his fellow Democrats taking control of the Senate — fueled a short stock market rally in late September and early October.

The narrative was simple: If Democrats hold all the cards, the spending will be big.

Should it happen, stocks will probably rise along with expectations for economic growth. The impact will be evident in other markets, too: Long-term interest rates would rise, and the dollar would fall as investors bet on larger federal deficits and slightly higher risks of inflation.

Asterisks abound however. A blue wave also promises more legislation on taxes or regulation, so analysts think a thin Democratic majority in the Senate — the so-called light blue wave — that leaves some limits on the Democratic agenda might be a slightly better outcome for investors.

Return of the Red Senate

Conventional wisdom on Wall Street is that Washington gridlock is usually best for stocks, because it means the government is unlikely to do anything that hurts corporate profits.

But the coronavirus crisis and ensuing economic slump have prompted some soul-searching on this point, and many Wall Street analysts see a split decision on Tuesday — with Republicans retaining control of the Senate and Mr. Biden taking the White House — as potentially the worst outcome for financial markets that are hanging their hope on a stimulus bill.

“A Biden win with a Republican-controlled Senate would likely lead to much less fiscal stimulus, little public investment and no major tax changes,” analysts with the money management giant BlackRock wrote in a recent note.

Another Trump Triumph

Pollsters are putting a high probability on a Biden victory, but it is still possible that President Trump will win re-election.

It would most likely mean the Republicans also retain control of the Senate, while Democrats almost certainly still control the House of Representatives.

In short, nothing will have changed in the standoff over how much spending to authorize, and optimism about another large-scale near-term stimulus package could quickly evaporate.

On the flip side, though, a second Trump term would ensure that taxes on companies or the wealthy won’t be rising. Plus, Mr. Trump could replace the Federal Reserve chair, Jerome H. Powell, with someone who is much more in tune with the president’s preferred monetary-policy posture and something stock investors might love: low interest rates forever.

The Uncertain Outcome

A vote that is so close in certain key swing states that the outcome hangs on litigation that will ultimately be resolved by the Supreme Court will be trouble for investors.

Even if Mr. Biden wins the election, President Trump has suggested on multiple occasions that he might not accept the outcome.

If Mr. Trump doesn’t concede, it’s hard to know when this fraught election season will end. In such an environment, there won’t be any progress on a stimulus deal, most likely delaying the arrival of any more help for the economy.

In other words, uncertainty that has weighed on markets in recent weeks will probably be projected out for the foreseeable future. That means the stock market would be in for another rocky ride until it’s clear who will lead the federal government for the next four years.

No matter who is elected, the next president will face an economy that is still reeling after the shutdowns last spring. While some areas have bounced back, others remain deeply depressed, and millions of Americans are still out of work.

75.3%

Share of adults ages 25 to 54 who were working in September. That’s up from 69.7 percent in April, a 45-year low, but it’s still about as bad as in the worst of the Great Recession.

2.4 million

Number of Americans in September who had been unemployed for more than six months — what’s considered to be long-term unemployment.

824,000

Number of Hispanic women who have left the labor force since February. Service-sector job losses and school closures have been especially hard on Black and Hispanic women.

-3.5%

Change in gross domestic product from the end of 2019. G.D.P. rebounded from its spring plunge, but remains well below its prepandemic level.

+7.2%

Growth in consumer spending on goods from January to September. With nowhere to go during the pandemic, Americans are buying more stuff than ever.

-6.1%

Decline in consumer spending on services from January to September. Hotels, restaurants and movie theaters have reopened around the country, but sales are nowhere close to normal.

6.5 million

Annual rate of sales of existing homes in September, up 21 percent from a year earlier. The housing market has been fueled by ultra-low interest rates and city dwellers seeking more space.

-6.4%

Change in manufacturing output since January. U.S. factories weren’t hit as hard by the crisis as many other sectors, but like the rest of the economy they have seen progress stall in recent months.

With Election Day imminent, a prominent Texas business leader last week appeared to urge her employees to consider voting for Donald J. Trump and other Republican candidates.

Barbara R. Smith, chief executive of the Commercial Metals Company, a manufacturer in Irving, Texas, suggested on Thursday in a memo to workers that a Democratic president and Senate could diminish the company’s future earnings by $200 million a year.

“There are sharp differences between the two candidates’ approaches toward the economy, trade, national security and entitlements,” she wrote, adding, “I urge you to consider each party’s platform and its impact on this great company you have helped to build.”

The memo, a copy of which was reviewed by The New York Times, was distributed to thousands of Commercial Metals employees around the United States, according to one recipient.

The memo left some Commercial Metals employees uncomfortable, according to two people with knowledge of the reactions, leading Ms. Smith to clarify her intentions, one of them added.

In a follow-up note to employees on Monday, Ms. Smith told employees that “the candidates you vote for and the policies you support are entirely your own business, but whatever your political beliefs, what is most important is that you vote.”

In the original memo, Ms. Smith wrote that the company’s government affairs experts had reviewed the possible impact of various election outcomes, and found that a “unified government” scenario — involving a Democrat in the White House and at least three additional Democratic seats in the Senate — could lead to an increase in corporate taxes of up to 35 percent, a pivot to greener industries that could harm metals manufacturers and a removal of Trump-era tariffs that have benefited U.S. steel and aluminum companies. Those actions, taken together, could hurt the company’s bottom line, the analysis found.

Joseph R. Biden Jr. has said that if he were to win the presidency, he would push for an increase in corporate taxes to 28 percent from their current level of 21 percent under Mr. Trump. While Mr. Biden has embraced the idea of spending government money on renewable energy and has criticized Mr. Trump’s tariff policies for alienating allies, he has not taken clear positions on either a carbon tax or tariff reforms.