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Markets Down Worldwide After Dem Victory

From the DNC’s Associated Press:


Senate Minority Leader Harry Reid, D-Nev., with House Minority Leader Nancy Pelosi, D-Calif., left, addresses the crowd at the Democratic Congressional Campaign Committee victory celebration in Washington Wednesday, Nov. 8, 2006.

Stocks fall on midterm election results

By TIM PARADIS, AP Business Writer

NEW YORK – Wall Street retreated Wednesday after Democrats scored a huge victory in congressional elections, raising questions about how sympathetic the federal government will be toward business.

Investors had largely expected Democrats to win control of the House of Representatives for the first time in a dozen years, but still undecided Senate races in Montana and Virginia that left the leadership of that house unclear created the type of uncertainty investors dislike.

Still, some pullback in stocks was to be expected after back-to-back sharp gains for the major indexes this week.

Companies in sectors as disparate as housing and stem-cell research showed movement Wednesday as investors tried to determine how government might weigh in with regulations or business-friendly measures.

"Investors are looking for a more active Washington," said Subodh Kumar, chief investment strategist for CIBC World Markets, citing a relatively stable dollar. He expects sectors like health care and defense will face pressure from Democrats interested in reining in government spending.

In midmorning trading, the Dow Jones industrial average moved off earlier lows and was down 14.48, or 0.12 percent, at 12,142.29.

Broader stock indicators were lower. The Standard & Poor’s 500 index was down 1.69, or 0.12 percent, at 1,381.15, and the Nasdaq composite index fell 0.46, or 0.02 percent, to 2,375.42.

Bonds showed little movement, with the yield on the benchmark 10-year Treasury note flat at 4.66 percent from late Tuesday; investors were awaiting the results of the government’s auction of 3-year notes later in the day. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 44 cents to $59.37 on the New York Mercantile Exchange.

Kumar expects the changes in Washington to increase pressures for restructuring and mergers in the health care sector. In the defense space, he sees bigger, more diversified names like Boeing Co. holding up better than small, specialized players. He expects Democrats will look to trim some defense spending to pare the budget deficit. Boeing was down 93 cents at $83.62.

"Pullbacks in drugs would be considered an opportunity and I would expect the large-cap defense contractors to remain very stable," Kumar said. "The diverse defense contractors are better positioned than the more esoteric, specialized ones which are more likely to see their contracts trimmed."

Companies in the stem-cell sector showed gains after voters in Missouri narrowly approved a referendum guaranteeing federally approved stem-cell research and treatment will be available in the state. StemCells Inc. rose 20 cents, or 6.5 percent, to $3.26, while Geron Corp. rose 23 cents, or 2.8 percent, to $8.61. Aastrom Biosciences Inc. was up 4 cents, or 2.7 percent, to $1.53.

Also, companies in the mortgage business made advances on the notion that Democrats would push plans to broaden access to housing. Fannie Mae was up $1.26, or 2.1 percent, at $61.14, while Freddie Mac was up 91 cents at $70.77.

In other corporate news, Cablevision Systems Corp. fell 11 cents to $27.82 after the cable TV operator and owner of properties such as Madison Square Garden, reported a wider-than-expected third-quarter loss.

Sirius Satellite Radio Inc. rose 10 cents, or 2.4 percent, to $4.19 after posting a narrower-than-expected loss as revenue more than doubled.

Federated Department Stores Inc., parent of Macy’s and Bloomingdale’s, reported that it swung to a third-quarter loss from a profit due to acquisition costs. Federated was up 8 cents at $40.43.

Declining issues were virtually even with advancers on the New York Stock Exchange, where volume came to 242.5 million shares, compared with 215.1 million traded at the same point Tuesday.

The Russell 2000 index of smaller companies was down 1.08, or 0.14 percent, at 765.47.

Overseas, Japan’s Nikkei stock average closed down 1.08 percent. In afternoon trading, Britain’s FTSE 100 was down 0.52 percent, Germany’s DAX index was down 0.54 percent, and France’s CAC-40 was down 0.45 percent.

Hey, maybe the Democrats will be able to initiate a recession just in time for the 2008 elections.

I do love the photo, though. Harry Reid is so relieved that he won’t be going to jail for his multi-million dollar land swindles.

This article was posted by Steve on Wednesday, November 8th, 2006. Comments are currently closed.

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