Washington, D.C., may have changed its stripes in the past 24 hours, but the stock market sees only green.
Indeed, investors were just as moved Wednesday by the prospect of
Vista operating system's rollout and anticipation of
earnings (which did not disappoint) than the Democratic victory on Capitol Hill or Secretary of Defense Donald Rumsfeld's resignation.
can lead the
Dow Jones Industrial Average
to a new record closing high the day after a Democratic victory in midterm elections, the stock market apparently does not fear, or loathe, Democratic control of the House or the Senate. Exxon's and Altria's shares climbed 2.21% and 1.39%, respectively.
"You would have seen disappointment registered if it was going to be registered," says Louise Yamada, of Louise Yamada Technical Research Advisors. "The Dow rally looks like it has legs."
After weakening in the first half of the trading session, the markets rebounded in the afternoon. The Dow closed up 0.2% to a record 12,177.27, while
gained 0.22% to 1385.91. The
climbed 0.4% to 2385.43.
While the wave of anti-incumbent sentiment turned the tide in Washington, Wall Street was seemingly no more concerned than it was Tuesday about the impact of minimum-wage legislation, debate over the Bush tax cuts, hearings on big oil profits, potentially more financial regulation, or any other policy changes that might take place.
"This is still gridlock," says Art Hogan, chief market analyst at Jefferies & Co., noting that the president is unlikely to be able to start a war in another country and can't cut more taxes with the Democrats in control of at least the House of Representatives. (At the time of publication, control of the Senate remained unclear, pending the outcome of a very tight race in Virginia between Republican Sen. George Allen and Democrat Jim Webb.)
Hogan believes the defense budget is a "sacred cow" and will go untouched, while Big Pharma may be a concern. Repealing tax incentives for big integrated oil companies would take a long time to get through, he says, and while there may be some changes afoot from the legislative branch, the Democrats are still dealing with a close call in the Senate and a possible presidential veto.
Shares of defense contractor
were up 0.54% on the day, as integrated oil companies soared. Shares of Exxon,
each gained over 1% on the day. The price of oil jumped $1.05 to close at $59.98 per barrel.
Nonetheless, the market did reflect some impact by the 2006 midterm election.
"This is more of a sector story than anything else right now," says Barry Hyman, chief investment strategist at EKN Financial. That said, the market was really only worried about one sector -- the pharmaceutical sector.
Shares of health care and pharmaceutical companies suffered Wednesday as the Democrats may legislate lower prices of prescription drugs for Medicare recipients. Shares of
Johnson & Johnson
dropped more than 1% on the day.
Shares of health insurance companies likewise plummeted as years of huge profit growth are likely to end under Democratic leadership in Washington, which could well bring change and reform to the system. Shares of
declined between 1.77% and 5.9%.
Generic drug companies, which are said to be winners under Democratic leadership, didn't fare much better than their full-price brethren. Shares of
ended the day down 0.09% and 0.39%, respectively, while shares of
couldn't overcome disappointing earnings and dropped 3.6% on the day.
, obvious benefactors of Democratic policies, climbed 2% and 2.9%, respectively.
After digesting the election news, investors bid up the Nasdaq based on some big news in technology. Microsoft's new operating system Vista is ready, which sent its shares up just 0.1%, but it touched a new 52-week high of $29.23 intraday. Shares of Cisco were up 1.05% on the day ahead of its
strong third-quarter earnings report and were higher 3.6% in post-market trading.
So while many things have changed in the past 24 hours, the market's
song remains the same and its melody is still gridlock.
In keeping with TSC's editorial policy, Rappaport doesn't own or short individual stocks. She also doesn't invest in hedge funds or other private investment partnerships. She appreciates your feedback. Click
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