Investors expect Democrats to take control of the White House and Senate in the Nov. 3 election, according to Morgan Stanley Chief Financial Officer Jonathan Pruzan.
“A blue wave is priced into the market,” Pruzan said Thursday in a Bloomberg Television interview. Judging by the market moves in the lead-up to the vote, investors don’t seem spooked by the possibility, he said.
The S&P 500 has advanced about 11% since the end of June as polls showed Democrat Joe Biden widening his lead over President Donald Trump. Other surveys have shown Democrats gaining in key Senate races as well, suggesting they might take control from Republicans. Democrats are expected to hold on to their majority in the House of Representatives.
Pruzan said in an earlier interview with Bloomberg that Morgan Stanley clients have been expressing concern that the election could lead to more volatility than usual. He pointed to predictions that the winner might not be decided in a timely manner.
“In a typical election season, you would see volatility increasing into the election and then subsiding,” Pruzan said. “If you look at some of the metrics, expectation is for volatility to persist through the election. There’s an emerging view that the election will not be as clear as has historically been the case.”
Pruzan also said investors continue to expect additional fiscal stimulus from Washington.
“It’s not a question of if, but when and how big,” he said.
This article was provided by Bloomberg News.