The concern is that if Democrats regain control of key congressional committees, government would fall back into bad spending habits even if the White House clung to the rhetoric of the balanced budget.
"I think the market would react very badly to a Democratic majority," said Byron Wien, a strategist at the New York investment bank Morgan Stanley. "There is a legitimate worry that the likelihood of deficit-enhancing legislation would be increased."
Lower long-term interest rates resulting from progress on the deficit have helped to take the Dow Jones index past the 5,000 and the 6,000 barriers during the past year. Share prices have doubled since Mr Clinton took office, and have climbed 140 per cent in six years.
However, calmer voices on Wall Street think the fears of a post-election crash are exaggerated and any decline in share prices would only be short- lived. Abby Cohen, at the investment bank Goldman Sachs, said yesterday: "The Clinton administration has a record of following a tight fiscal policy, and what's more they are proud of it."Reuse content