A split or united government coming out of a consequential U.S. presidential election next week could hold the key to how stocks perform going forward. The Nov. 5th election is set to remove a critical overhang for markets, which have had trouble pricing in a victory for either former President Donald Trump or Vice President Kamala Harris with any real certainty. The latest NBC News poll shows that both contestants are locked in a dead heat. However, the recent outperformance in financial stocks, and a spike in bond yields, suggest markets are anticipating both expansive tax cuts and greater deficit spending — patterns that point to a Trump victory. But the true implications for investors monitoring the election may lie in which party controls Congress, rather than who will sit in the White House. A split U.S. House of Representatives and Senate suggest the status quo could continue, rather than a more severe overhaul of tax and spending policies that could come from either a Democratic or Republican sweep. Gridlock would help restrain a ballooning deficit that many say is causing long-term interest rates to spike, threatening the bull market. “I think the best outcome for the market would be a divided government,” said Nanette Abuhoff Jacobson, global investment strategist at Hartford Funds. “That would be a scenario where the market would go up and you’d have a relief rally.” “Any other outcome, I’m not sure,” Abuhoff Jacobson added. .SPX YTD mountain S & P 500 The importance of whichever party controls Congress was highlighted by Trump’s recent trips outside battleground states, such as New Mexico , a state that hasn’t voted for a GOP presidential nominee in roughly 20 years. “You have former President Trump coming to Albuquerque, and you can scratch your head and say, ‘Why isn’t he in a swing state?'” Brian Burrell, portfolio manager at Thornburg Investment Management, a firm that is based in Santa Fe, New Mexico. “Well, you know, there’s some close House elections in this state, and I think that goes to show you the importance of that aspect of the political race.” Jay Hatfield, CEO of Infrastructure Capital Advisors, said he’s paying special attention to what happens in the Senate, where Republican control could mean tax increases for corporations will not get passed through in the scenario of a Harris victory. “If we get some clarity on the Senate, and particularly if the Republicans look like they’re going to take the Senate like, say, by Wednesday morning, that will be make a huge, huge positive for the market, because then it’s not as critical what happens with the House and the president,” Hatfield said. Too soon to call Historically speaking, stocks often rally in the final two months of any given year — but especially during presidential election years that have been as prematurely strong as this one has been. But that doesn’t mean investors aren’t concerned the election could provide the catalyst for a pullback in a market that many already regard as overvalued and highly concentrated. Evercore ISI’s Julian Emanuel anticipates a Trump victory, with a Republican sweep of Congress, will be positive for stocks, saying it could lead to a “‘performance chase’ melt-up” that pushes the S & P 500 over 6,000 in the days after the election, and close to 6,300 by year-end. In fact, it’s the scenario markets are most pricing in at the moment, with the SPDR S & P Regional Banking ETF (KRE) jumping more than 3% in the fourth quarter, and the 10-year Treasury yield climbing back over 4.3%. On the other hand, Evercore ISI’s Emanuel expects a Harris victory, with a Democratic sweep of Congress, could result in the S & P 500 falling to roughly 5,700. However, the broader index could still rise to close at 6,200 by the end of the year. Meanwhile, any delay in results could lead to a spike in volatility in markets and many expect that any dips in the market could be long-term buying opportunities. After all, they say, with inflation easing, and the Federal Reserve in cutting mode, the macroeconomic outlook remains intact. “I would view those episodes of high volatility or repricing of markets as opportunities to add risk for the long term,” Hartford Funds’ Abuhoff Jacobson said. US10Y 1M mountain U.S. 10-year Treasury yield On Friday, the major averages kicked off November on a strong note. But that comes after a challenging October for stocks, with the Dow Jones Industrial Average falling 1.3%. The S & P 500 slid 1%, while the Nasdaq dipped 0.5%. The benchmark U.S. 10-year Treasury yield last hovered above 4.3%. Possible Fed cut, earnings Elsewhere, Fed policymakers are also convening in the week ahead, with investors widely anticipating another quarter-point rate cut at the conclusion of the meeting Thursday. Markets were last assigning 98% odds to that possibility, according to the CME Group’s FedWatch Tool. But greater attention will be paid to Fed Chair Jerome Powell’s comments during the press conference, which may give some clarity to what the central bank will do going forward and whether the central bank will sneak in another rate cut in December. Fed funds futures are currently pricing in the likelihood the benchmark overnight lending rate will fall to a range between 4.25% and 4.50% by the end of the year, down from 4.75% and 5.00% where it is currently, the CME FedWatch Tool shows. Earnings season continues with about 100 S & P 500 companies confirmed to report. Of the roughly 350 companies that have already done so, about 75% have reported positive surprises, according to FactSet data. Elsewhere abroad, China’s parliament is expected to convene in a highly anticipated meeting where investors are expecting to gain insight into any fiscal stimulus plans. The standing committee of the National People’s Congress will hold its meeting Nov. 4-8. Week ahead calendar All times ET. Monday Nov. 4 10 a.m. Durable Orders final (September) 10 a.m. Factory Orders (September) Earnings: Marriott International , Diamondback Energy , Wynn Resorts , Palantir Technologies , NXP Semiconductors NV Tuesday Nov. 5 8:30 a.m. Trade Balance (September) 9:45 a.m. PMI Composite final (October) 9:45 a.m. S & P PMI Services final (October) 10 a.m. ISM Services PMI (October) Events: U.S. presidential election Earnings: Marathon Petroleum , Yum! Brands , Microchip Technology , Super Micro Computer Wednesday Nov. 6 No notable economic data. Earnings: CVS Health , Howmet Aerospace , Albemarle , Qualcomm , Gilead Sciences , Take-Two Interactive Software , Marathon Oil , Match Group Thursday Nov. 7 8:30 a.m. Continuing Jobless Claims (10/26) 8:30 a.m. Initial Claims (11/02) 8:30 a.m. Unit Labor Costs preliminary (Q3) 8:30 a.m. Productivity preliminary (Q3) 10 a.m. Wholesale Inventories final (September) 2 p.m. FOMC Meeting 3 p.m. Consumer Credit (September) Earnings: PG & E , Moderna , Molson Coors Beverage , Halliburton , Tapestry , The Hershey Co ., Ralph Lauren , Warner Bros. Discovery , Airbnb , Axon Enterprise , Expedia Group , Akamai Technologies , Fortinet Friday Nov. 8 10 a.m. Michigan Sentiment preliminary (November) Earnings: Paramount Global — CNBC’s Alex Harring contributed to this report.