A Wall Street strategy chief says the market is now getting 'nervous' that Republicans will lose the Senate

• Oppenheimer's John Stoltzfus told CNBC on Tuesday that the markets are getting "nervous" that Republicans will lose the Senate on Election Day.
• The chief market strategist said that the market's positive performance in October has been on expectations that Republicans will retain control of the Senate, even if Biden wins the presidency.
• But as the stalemate over the next stimulus plan continues and disagreements over the amount of fiscal relief within the Republican party grow, Stoltzfus is seeing markets weaken.

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Oppenheimer's John Stoltzfus told CNBC on Tuesday that weakness in the markets has been brought on by concerns that chances of a Republican-controlled Senate are slipping.

The chief market strategist said the market's positive performance so far in October has been on expectations that while Biden may win the presidency, Republicans will retain control of the Senate. The S&P 500 index has gained roughly 3% since the beginning of the month.

But Stoltzfus added that markets are now getting "nervous" that the Republicans may lose control of the Senate, especially as the party shows discord around agreeing on a stimulus plan. Republican Senate Majority Leader Mitch McConnell and President Donald Trump remain at odds over the amount of a relief bill, as the president has called for a larger one.

Stoltzfus also said that recently his firm forecasted there could be up to a 10% pullback in stocks in the near term if Democrats win control of the Senate.

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When asked by CNBC if he believed that the Senate races will be more important to the markets than the outcome of the presidential election because of the implications for taxes, Stoltzfus said, "I most certainly agree."

However, the strategist added that he thinks stocks will be higher one year from now as an effective vaccine is deployed and an economic recovery unfolds. Industrial, consumer discretionary, and information technology stocks will likely be doing well in a year, he said.