×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Wall St gains as big Republican win seen

Wall St gains as big Republican win seen
Comment E-mail Print Share
First Published: Wed, Nov 03 2010. 10 28 AM IST
Updated: Wed, Nov 03 2010. 10 28 AM IST
New York: US stocks rose on Tuesday on the expectation the midterm election and a Federal Reserve decision would create a more business-friendly environment, though many traders forecast a selloff in the days ahead.
The S&P 500 index has risen almost 14% since September on speculation of Republican congressional gains and new measures by the Federal Reserve to stimulate the economy.
“I wouldn’t be surprised to see us sell off tomorrow,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. “At this point, the market has built in a lot of positive expectations.”
Most polls show Republicans regaining control of the House of Representatives, while President Barack Obama’s Democrats could be left with a narrow majority in the Senate.
A divided Congress is typically seen as bullish for stocks as it makes passing new laws harder and lessens uncertainty for business. McCain said that if Republicans regain control of the Senate, though unlikely, there could be further stock gains on Wednesday.
Energy stocks were the second best performer among the 10 S&P sectors, rising 1.1%. Republicans, traditional supporters of the oil industry, are viewed as less likely to pursue regulations that would hurt profits. A 1.1% rise in oil prices on Tuesday also helped the sector.
Petrol giant BP reported a third quarter profit of $1.8 billion as it recovers from the Gulf oil spill, after reporting a $17 billion loss in Q2 as a result of charges related to the spill.
Drug maker Pfizer posted a third quarter profit that beat expectations but fell from the year-ago quarter. One-time charges and a higher tax rate related to its purchase of pharma company Wyeth for $68 billion, contributed to its profits falling 70% to $866 million. Revenues were up 39% as a result of sales from Wyeth products it acquired.
The Dow Jones industrial average was up 64.10 points, or 0.58%, at 11,188.72. The Standard & Poor’s 500 Index was up 9.19 points, or 0.78%, at 1,193.57. The Nasdaq Composite Index was up 28.68 points, or 1.14%, at 2,533.52.
The Fed is expected to announce a program of asset purchases of at least $500 billion via quantitative easing -- in effect printing money to buy bonds and lower borrowing costs. A statement is expected on Wednesday after a two-day meeting by the US central bank.
“Unless the election deviates markedly from expectations, attention will shift fairly rapidly to the Fed tomorrow since there’s been so much speculation about quantitative easing,” McCain said.
The US dollar fell 0.7% against a basket of currencies. The greenback and the S&P 500 have established a close inverse correlation in recent weeks. Their 30-day correlation stands at -0.84, with -1 being a perfect inverse correlation.
In earnings news, MasterCard Inc jumped 2.9% to $245.98 after it reported a third-quarter profit that beat expectations, but Kellogg Co fell 2.2% to $49.63 after it forecast weaker-than-expected earnings growth in 2011. and
The CBOE Volatility Index, Wall Street’s favorite barometer of investors’ fear, slid 0.6% after six days of gains.
About three stocks rose for every one that fell on the New York Stock Exchange, while on the Nasdaq, more than two stocks rose for every one that fell.
Comment E-mail Print Share
First Published: Wed, Nov 03 2010. 10 28 AM IST
More Topics: Markets | US | Stocks | DowJones | Company Earnings |