Wall St. frowns on election

NEW YORK (CNNMoney.com) -- Signs that there could be a prolonged legal battle to determine control of the U.S. Senate, following Democratic capture of the House, could help send stocks lower when markets open Wednesday.

Nasdaq and S&P futures indicated a lower Wednesday open.

As of 3:15 a.m. ET, Democrats had gained 26 seats in the House, 11 more than needed for them to take control of the chamber for the first time in 12 years. They had also gained 4 Senate seats, two shy of what was needed for control. (CNN.com's election coverage)

But futures declined a little further after there were indications that the Senate race in Virginia, which could determine control, could result in a prolonged recount. Democratic James Webb held a 7,500-vote lead over incumbent Republican Sen. George Allen, with only a handful of precincts yet to report.

Democratic candidate Jon Teeter was ahead of incumbent Republican Sen. Conrad Burns in the Montana race that was too close to call.

Even if the Democrats were to win the two outstanding races, analysts didn't expect the markets to get too flustered.

"I don't think we'll see a stock pullback. And even that would be short term," said Paul Mendelsohn, chief investment strategist at Windham Financial Services, prior to the returns. "Most of the issues that the Democrats are perceived as focusing on that might upset the market, like the capital gains tax, are locked up until 2010 anyway."

Exit polls indicated that the economy was the third most important issue in the election, behind the war in Iraq and terrorism. Of those surveyed, 50 percent gave a negative view of the economy, and Democrats captured the lion share of those who feel that way.

On the economic calendar, the Energy Information Administration's weekly report on oil inventories is due at 10:30 a.m. ET.

Besides the election, quarterly reports will be among the factors in the market. Reporting before Wednesday's open are Federated Department Stores (Charts), utility PG&E (Charts) and Sirius Satellite Radio (Charts). After the close come two closely watched results, network equipment maker Cisco Systems (Charts) and media conglomerate News Corp. (Charts)

--CNNMoney.com senior writer Alexandra Twin contributed to this report.

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Wall St., if the Democrats win

Winners and losers in a Democratic Congress