Expectations that Bush will hold Ohio lead and retain White House could guide stock indexes higher.
November 3, 2004: 7:42 AM EST
NEW YORK (CNN/Money) - U.S. stock futures rose sharply early Wednesday as investors cheered President Bush's lead in the electoral college over Sen. John Kerry, fully expecting his eventual re-election.
At 6 a.m. ET Wednesday, Nasdaq futures were up more than 1 percent, while S&P futures were up less than 1 percent.
Futures backed off their highs when it became clear that the Democratic challenger wasn't prepared to concede defeat even though some TV networks declared him the loser in Ohio, assuring Bush a second term. CNN declined to declare a winner in Ohio.
With three states outstanding, CNN said Bush held a 254-252 lead in the electoral college; 270 votes are needed for election (click here for CNN.com's coverage).
Just after 5:40 a.m. ET White House Chief of Staff Andrew Card told a rally in Washington that Bush's lead in Ohio was insurmountable. But the president declined to address supporters, at least until early Wednesday, without a concession from Kerry.
However, political economist Greg Valliere, chief strategist of Charles Schwab Washington Research, said the markets aren't likely to be worried about any prolonged uncertainty in the election's outcome, or even of an upset win by Kerry. The margin of about 140,000 votes in Ohio in favor of President Bush with almost all the votes counted makes such a comeback unlikely in the eyes of investors, he said.
"This is not comparable to 2000. If we were talking 3,000 or 4,000 votes, it'd be a big story. But I think the markets will perceive this as a temporary delay of the inevitable," Valliere said.
Among the sectors that could get a boost is drugmakers, due to the easing of concerns that Kerry would have moved to limit prices they charge for prescription drugs. Dow components Pfizer (Research) and Merck (Research) were both up 3 percent in pre-market trading on the INET electronic brokerage early Wednesday while Bristol-Myers Squibb (Research) gained 2 percent.
Treasury prices tumbled in early trading, sending the 10-year note yield up to 4.13 percent from 4.05 percent late Tuesday. The dollar strengthened against the yen and euro. Gold was slightly higher .
"It is just the traditional argument where Republicans are seen as better for the stock market, so stocks go up and bonds go down," Bert Gochet, interest rates strategist at UBS in Hong Kong, told Reuters. "Nothing more complicated than that.
U.S. crude futures rose 66 cents to $50.28 a barrel in electronic trading, while Brent crude gained 69 cents to $47.24.
There had been some thinking among traders that a Kerry victory would have led to a strong push for alternative energy sources and conservation. There was even speculation that a President Kerry would have tapped the strategic petroleum reserve to help contain prices. Those concerns were lifted with the expectation of a Bush victory.
"A Bush victory will be big for oil demand and keep prices high," said Phil Flynn, an analyst at Alaron Trading in Chicago told Reuters. "Not only will the SPR be filled but I think they may expand it."
Asian-Pacific stocks ended mostly higher; Tokyo was closed for a holiday. European markets rose in early trading. (Check the latest on world markets)
Stock markets displayed the anxiety that permeated the electorate Tuesday. The Dow Jones industrial average posted a 0.2 percent decline, while the Nasdaq composite index was up 0.3 percent.
Economic reports due later Wednesday include September factory orders and the Institute for Supply Management's services index, both scheduled for release after the market open. Economists surveyed by Briefing.com see a 0.4 percent increase in factory orders, compared with a 0.1 percent decline in August, and a rise in services activity to 58 from 56.7 in September.
Also due Wednesday are the individual vehicle makers' reports on October sales, and a pre-market earnings report from Time Warner (Research), the world's largest media company and owner of CNN/Money. Shares of Time Warner rose 0.7 percent in Frankfurt trading.
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
