<FONT COLOR=BLUE>MARKET SNAPSHOT--Futures gain awaiting final results
Election still too close to call
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 8:14 AM ET Nov 8, 2000
NEW YORK (CBS.MW) - The stock market is set to gain ground at the open Wednesday after holding its breath during the past couple of sessions awaiting the outcome of the tightest presidential race in 124 years.
While the race has yet to produce a new resident in 1600 Pennsylvania Avenue, an anticipated victory by Rebublican candidate George W. Bush is pushing the stock futures markets higher and bond markets lower.
Bleary eyes reign on Wall Street as market participants await a recount in the State of Florida, upon which the results hinge with 25 electoral college votes up for grabs. Bush currently holds a slight advantage over Vice President Al Gore in Florida.
Overseas markets reacted favorably when a victory by Republican candidate Bush was initially declared based on a projected win in Florida - which later turned out to be too close to call.
"We'll be waiting for a while. A recount in Florida will take some time," remarked Art Hogan, chief market strategist at Jefferies & Co. "The initial pop in European markets when Gore conceded the race is likely an indication of how U.S. markets will react," Hogan added. Listen to CBS MarketWatch's interview with Art Hogan.
Sector swings
Watch for gyrations in sectors that are perceived to be more sensitive to differences in Bush's and Gore's platforms such as drug, energy, defense and tobacco companies.
Among the tobacco companies, Dow-component Philip Morris (MO) added 88 cents to $36.13 in Instinet pre-market dealings. Among the big pharmaceutical companies, Pfizer (PFE) shed 68 cents to $44.13, erasing earlier gains. The company lost in the U.K.'s high court a ruling on one of its patents for the blockbuster drug Viagra. Still, the drug giant said the ruling represents no immediate threat to Viagra sales. See related item.
The market's belief that Bush will have a more hand-offs approach with U.S. corporations should benefit companies like Microsoft (MSFT). The software behemoth, entangled in an antitrust case, may get a more lenient regulatory treatment from Bush. Or so the belief goes. Microsoft rose $2.5 to $73. The stock has put on quite a show in recent weeks, gaining 17 percent since the start of October.
Cornering the futures markets, December S&P 500 futures gained 3.90 points, or 0.3 percent, and were trading roughly 6.80 points above fair value, according to figures provided by HL Camp & Co, Nasdaq futures, meanwhile, gained 12.50 points, or 0.4 percent in extremely choppy action.
"We'll see a short-term reaction in the market," Hogan said. But it'll soon be business as usual in no time, he conceded.
On the surface, Bush's proposed fiscal policies are more favorable for stocks. But if Bush emerges as the winner, Hogan said, his agenda won't be implemented in its original form and shouldn't make much of a difference to the market in the long run.
Market participants favor gridlock - meaning a split government - which is viewed as perpetuating the status quo. Americans don't want to see this decade-long expansion end. After all, it has produced outsized gains in the stock market over the past five years.
If Bush takes the Oval Office, the interesting twist for the market would be contending with one party both in Congress and in the executive branch.
Republicans will maintain control in the House of Representatives and the U.S. Senate, albeit with narrower margins. The GOP holds an advantage of 50 to 48 in the Senate, according to CBS News.
Hogan doesn't see any broad, sweeping changes in fiscal or monetary policy since it will remain difficult to get agendas through.
"I think margins are so tight that it doesn't really matter who [controls] Congress. The majority is too narrow for either candidate to have a mandate," Hogan said.
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