One of the most hyped market-moving events of the year is here.

Americans went to the polls on Tuesday to vote in a presidential election between Donald Trump and Kamala Harris. The outcome could have implications for financial markets for the rest of the year and beyond.

For the broader market, Wall Street strategists see the biggest risk in a contested election where the outcome will be unclear for weeks.

“A close, contentious election is the biggest tail risk we see for U.S. stocks in the coming days and months, although we also suspect a Democratic victory could also surprise U.S. equity investors,” wrote Lori Calvasina of RBC Capital Markets in a note to customers Tuesday morning.

According to Calvasina, market strategists are discussing the possible unraveling of a so-called Trump trade if the former president does not win on Tuesday evening. Last month, as the odds in the betting market moved in Trump’s favor, certain sectors rallied on the belief that the former president would improve these companies’ prospects if elected. For example: finance and cryptocurrencies.

When a new poll showed Kamala Harris leading Trump in Iowa on Friday, some of those trades began to change. Bitcoin recently hit a high of $71,000 per coin before briefly slipping below $67,000 after the survey was published. Likewise, the financial sector (XLF) was the second-worst performing sector on Monday, after leading the 11 sectors in October, possibly due to the belief that Trump’s policies would be more favorable for banks.

Conversely, strategists have pointed to other trades that have underperformed over the last month that could outperform if Harris wins. In a note to clients Sunday evening, Morgan Stanley Chief Investment Officer Mike Wilson wrote that consumer goods companies that could be hurt by Trump’s tariff policies had priced in potential negative impacts ahead of the election.

“We expect consumer stocks and renewable energy stocks affected by tariffs to outperform in the near term,” Wilson wrote, referring to a Harris victory scenario that sees a red-blue split in Congress. “Financial, industrial and commodity-sensitive sectors could initially underperform.”

Wilson added that a divided Congress could limit the durability of the measures.

“In our view, market leadership in the split congressional results will likely depend on the business cycle, the Fed’s response function and industry fundamentals post-election,” Wilson wrote.

Over the last month, there has been much debate about what is driving stock markets as investors digest positive third-quarter results, the start of the Federal Reserve’s easing cycle and a series of data releases showing that the U.S. economy is still solid grows.

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At a high level, Trump’s policies are seen as more inflationary than Harris’s. That would likely lead to higher interest rates and was one of the factors strategists have attributed to the 10-year Treasury yield (^TNX) rising about 70 basis points over the past six weeks.

Wilson wrote that even if a Trump victory pushes yields higher, stock markets could still easily absorb the rise in interest rates as long as the move is accompanied by continued expectations of stronger economic growth.

Still, Citi equity strategist Scott Chronert emphasized in a note that areas of the market like Homebuilders (XHB), which have underperformed the broader market amid recent interest rate hikes, would likely benefit from a Harris win.

“For Trump, higher interest rates are perceived as relatively negative given the financing outlook for most home purchases, both new and existing homes,” Chronert said of the homebuilding sector. “At Harris, some of her measures would provide direct support for first-time home buyers. Even if it were inflationary, that should benefit companies in the sector.”

On the more speculative side of markets, Trump Media & Technology Group (DJT) stock will remain in focus, especially given that it could cost Trump billions should the stock decline following an election loss.

The DJT had surged over the past month before slipping late last week as polls showed the election appeared to be close. Shares rose more than 13% in early trading on Tuesday.

“It’s a binary bet on the election,” Matthew Tuttle, CEO of investment fund Tuttle Capital Management, recently told Yahoo Finance’s Catalysts. Tuttle, who has a short position in the stock, believes it could fall to $0 if Trump loses.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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