Financial advisors can expect the markets to become increasingly volatile as midterm elections on Tuesday November 6 approach, market watchers said Wednesday.

Since the start of October, the S&P has reportedly declined 8.9 percent, the Dow has dropped 7.1 percent and the Nasdaq is down 11.7 percent as of the end of trading on Wednesday.

Panelists at an event in New York City attributed the volatility to rising interest rates and anxiety over whether Democrats or Republicans will dominate elections for the House and Senate.

Interestingly, an unscientific poll of Financial Advisor's readers found that they considered trade tensions with China and excessive equity valuation levels as the primary culprits behind the uptick in volatility in recent weeks. Peaking corporate profits ranked third and election prospects ranked last among their reasons for the downturn in stock prices during October.

“Investors have become nervous as you would expect,” said Wayne Wicker, chief investment officer of ICMA-RC, a non-profit financial services firm with $55 billion in assets under management and administration.

Wicker was among the speakers on a panel along with AllianceBernstein chief U.S. economist Eric Winograd about the possible impact of the midterm elections.

“The biggest possible impact on the economy is a Republican sweep, because there will be bigger tax cuts and bigger fiscal stimulus, which in the short term is more likely to be good for the market because the president prioritizes short-term growth,” Winograd told Financial Advisor. “Fiscal stimulus boosts you in the immediate future, but it also means slower growth in the distant future.”

The event at AllianceBernstein’s office included a discussion about a recent poll that showed that in 69 of the most contested House districts, 50 percent of voters support Democratic candidates and 47 percent support Republicans.

“Financial markets may react more negatively to a Democratic sweep, so there may be a tightening of financial conditions there if they dominate,” Winograd said.

However, some sectors are immune to politics, they said.

According to Wicker, the defense and aerospace industries are winners regardless of the political party that gains control of the House and Senate due to bipartisan support.

“Both Democrats and Republicans feel the need to increase capital spending and outside the U.S. there’s going to be more demand as we reach new agreements with NATO for broader defense,” he said. “Defense will push through some of the rhetoric you see in financial markets and continue to have strong earnings growth among a broad array of companies in that space.”

The energy sector has been a huge beneficiary of deregulation along with financials, but if the House changes hands to the Democrats, it could pose a challenge, Wicker said.

“To the extent there is push back on regulation, it may not impact earnings growth but it could increase visibility of the issue and give certain investors pause, which is not a barrier in the defense sector because it’s one of the few areas on Capitol Hill where both Democrats and Republicans agree there needs to be broader spending,” Wicker told a roomful of financial journalists.

Other panelists included Mike Hadley, benefit plan specialist and partner with Davis and Harman, and ICMA-RC Defined Contribution Investment Only (DCIO) head Craig Lombardi, who said they xpect major changes if the balance of political power shifts.

The midterms give the Democrats an opportunity to take control of key congressional committees that influence national retirement policy, Hadley said.

The four committees include the Senate Committee on Finance, chaired by Republican Orrin Hatch; the Senate Committee on Health, Education, Labor & Pensions chaired by Republican Lamar Alexander; the House Committee on Ways and Means, chaired by Republican Representative Kevin Brady; and the House Committee on Education and the Workforce, chaired by Republican Representative Virginia Foxx.

“You will have brand new faces,” said Hadley. “Orrin Hatch has said he is retiring, but the most important change is the chairmanship of the House Committee on Ways and Means, which would go to ranking member Democrat Richard Neal of Massachusetts.”

Neal has said that retirement policy will be a priority if he takes over the committee chairmanship, stating on his website that every American deserves to be financially secure in retirement.

But at the end of the day, the retirement savings crisis does not appear to discriminate along party lines. “With the tax reform early in the year, we saw very large corporations increase their retirement match, which increased people’s savings,” Lombardi said. “No matter if it’s the Democrats or Republicans that are in place, it’s about what the individual feels they have in their pocket.”