How will the stock market react if Democrats win the White House and Senate? Here's what history suggests.

Timmer found that a Democratic president and divided Congress represents the best outcome for investors, based on the historical record.Incidentally, the stock market tends to fare worse in the year or two after an election than during the two years preceding an election – a result on which the various studies tend to agree.In the first year after an election, large stocks have returned about 7.9%, according to Timmer's report, rising successively to a 9.1% average gain in the fourth years, which also happen to be election years.While the overall market might not be affected much by which party takes control of the White House, companies in certain industries could feel the repercussions.For example, pharmaceutical companies appear to be lagging because of the possibility of a Biden victory, while various alternative-energy companies are on a roll, wrote Jack Ablin, chief investment officer at Cresset Asset Management, in a commentary.Pharmaceutical makers could be hurt if Biden reinforces the Affordable Care Act to give the federal government more power to negotiate lower prescription drug prices."Negotiated pricing would likely dent health-care sector profits because, under the current system, most cost increases are borne by patients and their employers," Ablin said. "Among all the industries, it seems that foreign and domestic fossil-fuel companies would be the most disadvantaged by a Biden presidency."A Biden victory also might alter the nation's income-tax code, especially if Democrats hang onto the House and wrest control of the Senate, making it more likely he could push his agenda through Congress.Biden has proposed raising the top rate for individuals from 37% currently to 39.6%, where it stood prior to tax reform, according to a report from the Committee for a Responsible Federal Budget.