According to the Wisdom Financial APP, the U.S. presidential election is currently in a fierce and tense state, and investors may face unclear or controversial election results, which could hamper this year's rally in U.S. stocks.

With less than a month until the election, opinion polls and prediction markets indicate that Democrats' Kamala Harris and Republicans' Donald Trump are almost evenly matched. A Reuters/Ipsos poll released on Tuesday showed Harris leading Trump with a slight advantage of 46% to 43%, a more intense situation compared to the same poll results a few weeks ago.

Given Trump's attempt to overturn the outcome of the 2020 election against Biden, investors anticipate that if a close election result occurs this year, it may also be controversial. The balance of power in Congress is also precarious, and some potential evenly matched competitions may exacerbate this uncertainty.

Walter Todd, Chief Investment Officer of Greenwood Capital, said, "This will be a closely contested election. The likelihood of some kind of dispute is higher than average, and that makes sense." He expects that if the voting results remain uncertain for more than a few days, there will be selling in the stock market.

Todd said, "The market doesn't like uncertainty, and people certainly don't want to be in the dark about who the U.S. president is for one or two days after the election."

At present, political uncertainty does not seem to dampen investors' enthusiasm for the stock market. Recently, robust economic growth in the U.S. has propelled the S&P 500 index to new highs. The benchmark index has risen by 21% year-to-date, with the potential to achieve double-digit gains for the second consecutive year.

This is not to say that investors are not paying attention to the election. The Chicago Options Exchange Volatility Index (VIX), which measures the demand for options trading market volatility over the next 30 days, has risen by about 6 points from its September low to 20.9, a level that is usually associated with moderate to high expectations of market turmoil. Investors attribute part of the increase in this index to the upcoming election.

The options market also reflects increased concerns about tail risks, which are market shocks triggered by events that are unlikely to occur but have a significant impact. The United States National TailDex Index, which measures such risks, recently reached its highest level in a month.

Tallbacken Capital Advisors CEO Michael Purves believes that investors are overly focused on the days before and after the vote, and that the weeks following November 5, when a fiercely contested election may disrupt the market.

He said: "Rather than being a problem with the election results, it is more about the potential risks after the election, that most people believe this election is invalid. For me, this is a real risk...litigation results, the stock market may be sold off."

There have been few precedents of challenged elections recently. Trump's attempt to overturn the results of the 2020 election had little impact on the market. Despite Biden not being formally declared the winner until the weekend after election day, US stocks rebounded during the remaining trading days that week.

But investors may not be as optimistic this time, especially if either party in the two-party system challenges a neck-and-neck result and gains support from other lawmakers and election officials in swing states.

For months, Trump and his allies have been suggesting that they will challenge an election loss, repeatedly claiming concerns about significant non-citizens voting, although independent assessments and state reviews show this practice is extremely rare.

At the end of 2000, the US stock market experienced a sharp decline when the competition between Bush and Gore went unresolved for over a month, as Gore's campaign team challenged the disputed election results in Florida, marking one of the most contentious election cases in recent US history.

From the election day in 2000 until Gore conceded in mid-December, the S&P 500 index fell by 5%, with people's anxiety about technology stocks and the overall economy dragging down market sentiment. The index as a whole declined by 7.6% from November to December 2000.

Such fluctuations may cast a shadow on the outlook for the stock market in election years, which often perform strongly. Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, said that since 1952, in the last two months of presidential election years, the S&P 500 index has averaged a 3.3% increase, rising 78% of the time.

Purves from Tallbacken Capital suggests that investors hedge potential volatility related to elections through put options contracts. The value of put options contracts rises when the stock market falls.

Kurt Reiman, Head of Fixed Income Business for UBS Group Wealth Management Americas and Co-Head of ElectionWatch, remains generally bullish on the US stock market. However, he suggests that investors consider utilities stocks and gold among others to cushion their portfolios in a tight or contested election.Its price has soared to a historic high, closely related to market expectations of interest rate cuts by the Federal Reserve.to cushion portfolios in a tight or contested election.

Stephanie Aliaga, Global Market Strategist at JPMorgan Asset Management, says that once the uncertainty dissipates, any volatility that a contentious election may cause could be alleviated.

She says, "Elections bring uncertainty, but the election results will ultimately reduce this uncertainty." "In the end, as the uncertainty has been resolved, investors will see a near-boost or rebound effect after the election."