Stocks Rally on Bush Victory

Updated from 4:11 p.m. EST

Stocks rallied Wednesday, with health care, defense and energy stocks leading the way, as President George W. Bush won a second term in another close race for the White House.

Kerry conceded late Wednesday morning amid a close race in Ohio and glitches in Iowa.

The Dow jumped 101.30 points, or 1.01%, to 10,137; the S&P 500 gained 12.62 points, or 1.12%, to 1143.20, just 14 points shy of its 2004 high touched in February; while the Nasdaq added 19.54 points, or 0.98%, to 2004.33, closing above the 2000 level for the first time since July 2. All the indices ended well off their session highs.

Volume was relatively heavy on the New York Stock Exchange where 1.7 billion shares changed hands with advancers ahead of decliners 7 to 2. On the Nasdaq, 1.9 billion shares traded and advancers beat decliners 7 to 3.

The election outcome this time turned on Ohio's 20 electoral votes. Bush beat Kerry by about 136,000 votes in the Buckeye State, but the Democratic challenger was initially relucant to accept defeat there, citing ballot issues. Ohio put Bush over the 270 electoral votes needed for official victory. The president won 51% of the popular vote, vs. 48% for Kerry.

"I think we're seeing a great relief rally because we're not going to see a repeat of the 2000 election," said Bill Livesay, senior market analyst at CyberTrader. "The economic situation is not going to change overnight, but it's important that this uncertainty is out of the way. Longer term, we're going to fall back on the economic data."

Livesay said the Nasdaq appeared to be "in better shape than the S&P 500 and the Dow," and he expects "a little pullback in energy stocks, which will likely weigh on the S&P."

"The uncertainty is behind us," said Arthur Hogan, chief market analyst at Jefferies.

As far as "sector specifics are concerned, we'll definitely see pharmaceuticals and energy stocks do better, but also dividend stocks," added Hogan.

"But I wouldn't necessarily get bogged down with the sector specifics," said Hogan. "I'd really focus on the fact that this market has been sideways for the better part of the last eight weeks due to the uncertainty of this election, and clearly, with that in the rearview mirror, today I think we have a broad market rally."

The election results were less obvious in other markets. The 10-year Treasury note was down 6/32, with the yield up to 4.07%. The dollar was moderately higher vs. the euro and the yen, while gold prices edged up.

Crude oil prices jumped Wednesday. A report from the Department of Energy showed U.S. crude inventories rose in the most recent week, but renewed concerns about supplies had more of an impact on trading. Crude oil closed $1.26 higher at $50.88, after losing 10% in the past week.

Another drop in oil was icing on the cake for investors, who rushed to stocks likely to benefit from a second Bush term, such as drugmakers.