Wall Street has made it clear it favors Democrat Hillary Clinton over Republican Donald Trump, and there's plenty of history to show why that could be the case. Even though some of her policies may not appeal to investors, she is seen as being a known entity who would be more predictable than Trump. He is seen as volatile, and a win by the businessman would likely cause an immediate stock market sell-off even though his tax and regulatory policies are seen as more market friendly. In fact, stocks had their best day since March on Monday, when the FBI's latest investigation into Clinton emails turned up nothing new, improving her odds in the eyes of global markets. Stocks around the world rallied, and the Dow surged 371 points to 18,259. The was up 46 at 2,131. Traders said Election Day markets are biased toward moving higher, but stocks opened lower Tuesday.

U.S. presidential candidates Donald Trump and Hillary Clinton Reuters

Clinton is seen as a "status quo" candidate who is not likely to shock, while Trump is proposing trade policy that some fear could spark trade wars. While Trump is not a traditional Republican candidate, the stock market has performed better during Democratic presidencies. Over the terms of Democratic presidents going back to 1897, the Dow has been positive for all but one, with an average gain of 82 percent versus a 47 percent gain during Republican presidencies. The difference is even more dramatic when considering the performance of the S&P 500. The broader market index was higher over the term of the seven Democratic presidents going back to the 1920s, with an average gain of 96 percent versus a gain of just 29 percent in the eight Republican presidential terms. Three of those eight presidencies saw negative returns — Herbert Hoover, Richard Nixon and George W. Bush. So far, the S&P 500 has gained about 145 percent during President Barack Obama's term, bested only by the 209 percent return in the Bill Clinton term.

"With the market being up as much as it was in one day … if the only people who voted were Wall Street, Hillary would be a shoo-in," said Sam Stovall, chief investment strategist at CFRA. "Democratic presidents outperform, but Republican Congresses do even better."



The market has been most comfortable with the idea of a Clinton presidency and a Republican Congress. For a short period, before the initial news of a new FBI probe, the market was fearing Clinton would bring a sweep of Democratic control into Congress. But since then, the Republican hold on Congress has seemed to be more secure, and the market started to sell off in anticipation of a Trump win. "When both the House and the Senate have been Republican, the market was up 13.3 percent versus 7.4 percent under Democratically controlled Congresses, and since Congress controls the purse strings, you might conclude that it's more important to have control of Congress than of the presidency," said Stovall. He was referring to the average performance of the S&P 500 going back to 1945. Analysts have said they believe there could be an immediate knee-jerk sell-off if Trump wins, but the market could trade poorly if he challenges the election outcome too. Scott Redler, who follows the market's short-term technicals, said the options market is pricing a possible negative event of 100 points in the S&P 500, and 30 on the upside, based on options in the SPDR S&P 500 ETF. "If Trump wins, you could see 100 [points] down move," he said.

Art Cashin, director of floor operations at UBS, said if Clinton wins and the Republicans hold both houses of Congress, there is not likely to be much reaction.

Cashin said he believes a lot of the buying in Monday's market was foreign investors, relieved by the FBI outcome. "While we're concerned about what he might do, they're terrified," he said. So aside from the U.S. futures markets Tuesday night, markets around the globe will be the first to react to the U.S. election. Analysts expect Treasurys could sell off, the dollar could firm, and stocks and commodities could rally if Clinton wins. Biotech stocks may come under renewed pressure and the Mexican peso and stock market could rally. The reaction in the Treasury market to Trump has been a flight- to-safety trade, driving yields lower. Yields move inversely to price.