*

Wall Street hopeful NYC favorite Mamdani would moderate

positions

*

Spanberger becomes first female governor of Virginia; NJ

governor race also in focus

*

Races could signal which party has momentum ahead of 2026

Congressional votes

(Updates with result of Virginia race)

By Lewis Krauskopf, Davide Barbuscia and Laura Matthews

NEW YORK, Nov 4 (Reuters) - Wall Street was on edge

heading into the New York City mayoral election on Tuesday, with

a potential victory for Zohran Mamdani set to reverberate

through the heart of global capitalism, where financiers worry

about the city's lasting competitiveness and appeal.

Investors also are watching the results of governors' races in

New Jersey and Virginia to gauge whether Democrats are gaining

momentum against President Donald Trump's Republican Party ahead

of next year's U.S. midterm elections. In Virginia, Democrat

Abigail Spanberger, a former congresswoman and CIA officer, won,

U.S. media said, becoming the state's first female governor.

Mamdani, a 34-year-old state lawmaker who won the Democratic

nomination, has been leading in polls and in betting markets in

a fierce contest to run New York, the U.S. financial capital.

Wall Street and the finance industry have expressed broad

misgivings about the prospect of a Mamdani mayoralty, as the

democratic socialist pushes for higher taxes on corporations and

the wealthy. They are hopeful, however, that he moderates his

positions or finds roadblocks to achieving some of his aims.

A Mamdani win is "a risk I'm watching in 2026," said Dean

Lyulkin, CEO of Cardiff, a private investment firm and small

business lender in San Diego, California.

"Actual policy often turns out much more benign than

campaign rhetoric, but if other major cities follow this

pattern, markets may start pricing in more tax and regulatory

risks," Lyulkin said.

Mamdani's main opponent is Andrew Cuomo, the former Democratic

governor of New York state running as an independent, with

Republican nominee Curtis Sliwa third in most opinion polls.

Mamdani focused his campaign on affordability. His agenda

includes a rent freeze for rent-stabilized apartments, free bus

service, universal childcare and city-run grocery stores. His

policies also include hiking taxes on New York City's wealthiest

and raising the corporation tax, driving worries among the

finance community that the city's competitiveness will suffer.

While New York's mayor has no direct oversight over Wall Street,

the position sets the tone on whether the city is perceived as

business-friendly.

Some heavyweights in finance poured money into efforts to

defeat Mamdani, including high-profile investors Bill Ackman and

Dan Loeb.

Some are optimistic about Cuomo's chances. Worries tied to

Mamdani's victory are "somewhat overexaggerated," said Peter

Cardillo, chief market economist at Spartan Capital Securities

in New York, who believes Cuomo may have a better chance to win

than polls indicate, while as mayor Mamdani would face obstacles

to implementing his proposals.

"Even if he should win, I don't think we're going to see the

drastic program that he is proposing go into effect," Cardillo

said.

Brian Gardner, chief Washington policy strategist at Stifel,

said there could be an overreaction to the implications of a

Mamdani win beyond New York.

"If he wins, a lot of ink will be spilled about the

Democratic Party's move left," Gardner said in a note. "However,

Mamdani seems likely to win with merely a plurality and has

benefited from the opposition's inability to coalesce around a

single credible candidate."

Wall Street also had its eyes on other races, including in

Virginia and New Jersey, which could give an indication of how

voters are leaning ahead of next year's midterm elections, which

decide which party will control Congress. The results could

offer insight into how Americans are thinking about the ongoing

U.S. government shutdown and which political party is to blame.

If Republicans take a "big, big thumping," markets could see

some volatility, said Alex Morris, chief investment officer at

F/m Investments.

But a strong Democratic performance nationally on Tuesday

that indicates the party will do well in the midterms could be

positive for some investors who prefer partisan "gridlock" in

Washington. Currently, Republicans hold the presidency and

majorities in both the Senate and House of Representatives.

In New Jersey, Democratic U.S. Representative Mikie Sherrill

is pitted against Republican businessman and former state

lawmaker Jack Ciattarelli. In another vote with implications for

races next year, a California ballot measure would lead to

redrawing congressional districts meant to help Democrats in the

2026 midterms.

"Both the Virginia and the New Jersey races will give us a

picture in time of how the electorate stands at the moment, and

that can let us make some kind of rough conclusions on the

midterms," Chris Grisanti, chief market strategist at MAI

Capital Management in New York, said earlier. "If it's a good

night for the Democrats, then you're thinking that they're going

to be more likely to take back the House next year."