Why the Stock Market Is Fired Up for a GOP Win
Business + Economy

Why the Stock Market Is Fired Up for a GOP Win

Markets are psyched for a Republican victory in Congress that gives the GOP control of the Senate in addition to the House.

Republican-control of Congress could help drive a new Asia-Pacific trade pact and make for a more energy friendly environment in Washington, analysts say. It should also be a short-term catalyst for the market, unless the outcome is clouded by runoff elections.

"Investors have locked in a Republican majority in the Senate and House. The question is how dominant is that going to be?" said Jack Ablin, chief investment strategist at BMO Capital Markets. "Grid lock or unlocked? I think it's going to be gridlock."

Related: How the Bank of Japan Triggered a U.S. Stock Rally

Ablin said the odds are the stock market should continue to move higher into year end.

"Midterm Novembers are good. Midterm Decembers are good. Plus you've got the 'sell in May and go away effect' that ends in November," Ablin said. As October ends, markets enter the best six-month period for stocks, historically.

"There are a lot of things coming together from a historical perspective—the November election plus a Republican Congress and Democratic president is really the best of four combinations."

"I wish the market wasn't as expensive is as it is. To me, that's the only headwind," Ablin said. But the market looks good "from a technical, seasonal and numerical perspective."

Washington may adopt a friendlier attitude toward energy. For instance, Ablin said the Keystone Pipeline, delayed by the Obama administration and a lawsuit in Nebraska could ultimately end up before Congress, where it would likely pass with a Republican majority.

In the Senate, Republicans are expected to gain a small majority, not the 60 seats required for a super majority that would give them more power to push legislation.

But there are enough Democrats who favor the pipeline, which would take Canadian crude to the Gulf Coast, to allow it to pass.

Dan Clifton, head of policy research at Strategas, said if Republicans gain the Senate, they may be willing to push through a trade pact with Asia, which the president has favored. That would be good for energy companies interested in exporting liquefied natural gas to Asia but it could also help chemical companies that have pushed for.

Besides the election outcome, investors will be watching the government's oil and gas inventories report Wednesday at 10:30 a.m. ET. West Texas Intermediate fell to a three-year low, after Saudi Arabiacut prices to customers in the U.S.

Related: Millions Without Health Coverage Hang on Gov Races

There is also ADP private sector employment report, expected to show 220,000 payrolls. ISM nonmanufacturing data is reported at 10 a.m.

Earnings are also expected from Chrysler, Mondelez International, Time Warner, Toyota, Duke Energy, Chesapeake Energy, Covidien and Tim Hortons ahead of the market open.

After the bell, reports are expected from Qualcomm, CBS, Tesla Motors, News Corp, Whole Foods, Zillow, SolarCity and Prudential Financial.

This article originally appeared in CNBC.

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