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Considering how much Wall Street supposedly fears the election of presidential nominee John Kerry, the market has held up pretty well during the Democratic convention.

Stocks bounced strongly on Tuesday, the day after the convention began, and the market staged an impressive turnaround Wednesday after early weakness. Stocks continued to climb Thursday ahead of Kerry's formal acceptance of the nomination.

Stocks showed little reaction Friday to Kerry's nomination address, a speech that was long on foreign policy and contained little that is new about the candidate's domestic agenda. Kerry vowed an end to "corporate welfare" and said he would roll back tax breaks on the rich, took an


potshot and criticized health care policy -- all consistent with speeches he gave previously.

Perhaps investors were starting to believe Kerry's refrain that "hope is on the way." Or maybe they were looking at data from Ned Davis Research going back to 1901, which show that stocks have performed better under Democrats than under Republican administrations.

In all likelihood, the market's performance this week had less to do with the Democratic convention and more to do with the latest economic news, which included volatile oil, a strong consumer confidence report and weak gross domestic product data.

According to a study from Russell Investment Group, money managers are far more worried about the economic climate and "company specifics" than about the upcoming election.

"Election and government policy issues do not seem to be strong areas of emphasis for

money managers," said Russell's chief portfolio strategist Randy Lert. "Managers ... largely dismissed the investment strategy impacts of more specific governmental and public policy issues such as trade policy, tax reform and the budget deficit."

While concerns swirl among some investors that Kerry might repeal President Bush's tax cuts if elected, fewer than 16% of money managers surveyed said tax reform is something that would affect their investment strategy. Just 15% said trade policy factored into their decision-making process, and slightly more than 13% cited the budget deficit.

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In contrast, almost 63% of money managers surveyed by Russell said the economy would affect their investment strategy, while 55% said inflation was key and 47% highlighted the price of oil.

Russell surveyed 107 investment management firms, which individually manage an average of $38.7 billion. Since managers could select more than one issue of concern, the numbers don't add up to 100%.

"In a broad sense, the election doesn't affect how we allocate assets and what advice we give to investors," said Dorsey Farr, market strategist at Wilmington Trust.

Still, it would be a mistake to assume that money managers are ambivalent about the outcome of the election. For the most part, Wall Street wants Bush to be re-elected, and if investors are at all nonchalant right now, it's probably because they still firmly believe he will win.

Although recent polls have shown that Kerry and Bush are in a statistical tie, many fund managers seem to have confidence that Bush will win.

"It constantly amazes me when I talk to big institutional investors that there is virtual unanimity that Kerry is going to lose," said Greg Valliere, chief political strategist at Schwab's Washington Research Group. "In fact, many of them think Bush will win comfortably."

Since Kerry is likely to receive a boost in the polls, perhaps as much as seven points, after the convention is over, Valliere said money managers might have to reassess their views.

Drug stocks in particular could be hurt by this shifting perception, he said. Under a Kerry administration, pharmaceutical companies would be expected to face more regulatory scrutiny.

Of course, the biggest concern -- that Kerry would repeal the dividend and capital gains tax breaks -- is far from certain, since Congress is expected to remain in Republican hands after the election. The tax cuts do expire, of course, but not until 2009, and the Democrats would need to win the 2008 election to prevent them from being made permanent.

Still, hopes for a Bush win in November remain high on Wall Street, and if anything shakes that view in the coming weeks, it could prove to be a rude awakening for some.

"It's entirely possible that in a week or 10 days from now, the markets may be starting to really think that John Kerry could win this election," Valliere said. "I think people may have to start factoring in the possibility of a Kerry presidency."