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Bush victory relief sends stocks soaring

Wall Street closed Wednesday with a solid advance, having given up some of a strong rally seen earlier in the day, as investors expressed a sigh of relief over victory for President George W. Bush in the fiercely fought 2004 presidential election.

Wall Street closed Wednesday with a solid advance, having given up some of a strong rally seen earlier in the day, as investors expressed a sigh of relief over victory for President George W. Bush in the fiercely fought 2004 presidential election.

The Dow Jones industrial average finished the day with a gain of 101.32 points, or 1 percent, holding on to a good portion of a 180-point surge at the opening bell that drove the index to a high not seen in a month.

The broader Standard & Poor’s 500-stock index rose 12.62 points, or 1.1 percent, while the technology-laced Nasdaq composite index added 19.54 points, or 1 percent. By contrast, bond prices fell as investors abandoned Treasuries for stocks.

Traders blamed some of the stock market’s modest pull-back Wednesday afternoon on a rise in U.S. crude oil prices, which surged more than $1 on the New York Mercantile Exchange despite news of an increase in oil supplies ahead of winter.

Business-friendly Bush
Market strategists said Wall Street was pleased to see a Bush victory, as his policies are seen as more business-friendly than those of his Democratic challenger, Sen. John Kerry. The surge in stock prices also underscored a sense of relief on trading desks that a clear winner had emerged in what had been an extremely tight election race.

“It appears we won’t have a repeat of the 2000 election,” said Sam Stovall, chief investment strategist at investment research firm Standard & Poor’s, who characterized the market’s surge as “a Republican-inspired relief rally.”

Four years ago, the result of the presidential election took a month to sort out, leading to a sell-off in the stock market amid accusations of voting irregularities in Florida.

But while the market was obviously pleased with the 2004 election result, analysts like Kent Engelke, markets strategist at Anderson & Strudwick, warned the week could end with some profit-taking as investors start refocusing on the economic outlook, starting with this Friday’s monthly job creation report from the Labor Department, which will give a more comprehensive picture of the labor market.

“We’ll be giddy today, but we’ll soon return to the reality of the economic outlook,” Engelke said.

Some analysts like Marc Pado, chief equities strategist at Cantor Fitzgerald, were more optimistic. “I do not think [the rally] will fade away. I see a strong fourth quarter driving the market to post-2002 record highs,” he said. “For the year, we should end up in 5 to 9 percent.”

Anxiety about the outcome of the 2004 election has hobbled the market for weeks, keeping stock indices in a tight trading range. There had been concerns equities would sink in the absence of a clear winner after the polls closed.

After some uncertainty early Wednesday morning surrounding voting results in Ohio, President Bush emerged as the victor in the election after Kerry decided against contesting the vote in the battleground state and phoned Bush mid-morning to concede defeat.

Overseas markets closed Wednesday near six-month highs, lifted by the reports that President Bush has won a second term in office. In Europe, London’s FTSE 100 index added 0.5 percent, while Paris’s CAC-40 rose 0.1 percent and Frankfurt’s DAX closed flat. The Tokyo stock market was closed Wednesday for a national holiday.

Stock sectors boosted
A Bush win was seen as positive for U.S. drug stocks, as it is expected to reduce the threat of government-imposed price cuts. Rival candidate Democratic Senator John Kerry had said he wants the Medicare government health plan to negotiate lower prices direct with drug makers in a move that could lead to deep discounts on many medicines.

Drug giant Pfizer’s stock price rose 2.6 percent, lifting the S&P 500 index, while shares of defense contractor and commercial airplane maker Boeing also added 2.6 percent, helping the Dow industrials. Other stock sectors likely to be buoyed by a Bush victory include oil, healthcare and defense analysts said.

The Bush victory buoyed stocks in chemical and other companies battling asbestos litigation, as it expanded Republican majorities in the Senate and the House of Representatives.

Last month, Senate Majority Leader Bill Frist vowed to continue efforts to establish a multibillion dollar fund to compensate asbestos victims, but acknowledged the issue was stalled in Congress.

But with the prospect of four more years of pro-business Republican government following Tuesday’s election, Wall Street seemed confident such a fund would be established and ease the liability of companies targeted with asbestos lawsuits.

Shares of USG, a construction materials company operating under bankruptcy protection since June 2001 because of asbestos claims, jumped 26.2 percent on the Big Board.

Earnings news overshadowed
The presidential election results overshadowed a fairly busy day for corporate earnings, with Time Warner, the world’s largest media company, reporting a lower third-quarter profit, while Internet conglomerate IAC/InterActiveCorp, which owns the Expedia Web site, posted a solid rise in third-quarter earnings, sending its share price up sharply.

Shares of Tommy Hilfiger fell 5.4 percent after the retailer withdrew its earnings forecast for fiscal 2005. The company also said it was delaying the release of fiscal second-quarter results as it looks into questions raised by federal prosecutors about payments among subsidiaries.

On the economic front, the government said new orders at U.S. factories dropped unexpectedly in September, their biggest decline since April, on a big slide in orders for transportation equipment. But market observers said the week’s most important economic figure is likely to be Friday’s employment report for the month of October.

“If Friday's employment report shows good growth, and supports the idea that the economy is still growing, it could mean we’re likely to see the stock market rally to year-end,” said Peter Cardillo, chief strategist at New York retail brokerage S.W. Bach.