U.S. stocks seen surging as Bush leads election
03/11/2004 12:10
(Adds election details, Time Warner, updates prices)
By Michael Flaherty
NEW YORK, Nov 3 (Reuters) - U.S. stock futures soared on Wednesday, indicating the market would leap at the open, as investors bet that President George W. Bush has won reelection even as results from the key state of Ohio remain unsettled.
Bush's lead in the balloting was welcomed on Wall Street, where he is generally perceived as more friendly to business than his Democratic challenger, Sen. John Kerry. Investors also seem reassured by the prospect of continuing with business as usual should Bush remain in office.
Investors appeared confident that a clear-cut winner would emerge on Wednesday, despite questions over provisional ballots in Ohio that have delayed a final verdict and kept Kerry in the race. Four years ago, election results took a month to sort out, leading to a sell-off in the stock market.
S&P 500 futures were up 11.1 points and well above fair value accounting for dividends, interest rates and time to expiration on the contract, indicating the market would surge at the open.
Dow Jones industrial index futures rose 93 points, while Nasdaq 100 futures jumped 19 points.
"I think the market assumes that Bush is going to win. Investors feel that his lead in Ohio is unbeatable," said Michael Metz, chief investment strategist, at Oppenheimer Company.
"Traditionally, Wall Street thinks less regulation is better and they are fond of low taxes. Bush is the darling of Wall Street and it looks like they got what they wanted," Metz said.
The results also fed a rise in the dollar against the Euro and Japanese yen.
The election results overshadowed a fairly busy day for corporate earnings.
Time Warner Inc. , the world's largest media company, reported a lower third-quarter profit as it established a $500 million legal reserve and said it will restate results for its AOL Europe unit prior to 2002.
Oil prices were also outdone by the election.
U.S. crude oil prices spiked 1 percent to move back above $50 a barrel as signs of an electoral victory for Bush raised the prospect of continued high U.S. demand and Middle East supply anxiety, dealers said. U.S. light sweet crude was up 65 cents to $50.27 in electronic trading.
Rising oil prices raise concerns that higher energy costs will pinch corporate profits.
Drug groups are expected to take a cue from gains among European peers as the market bets on a Bush win to reduce the threat of government-imposed price cuts.
Democrat Kerry has said he wants government health plans to negotiate lower prices direct with drug makers in a move that could lead to deep discounts on may U.S. medicines.
Meanwhile, retail and media companies dominate the earnings calendar, with clothing makers Polo Ralph Lauren Corp. and Tommy Hilfiger Corp. , and coffee chain Starbucks Corp. reporting.
The Institute of Supply Management's (ISM) October index for non-manufacturing business activity, such as services, is due at 10:00 a.m. (1500 GMT), with an increase to 58 from 56.7 in the prior month forecast by economists.
U.S. factory and durable goods orders for September are due at 1500 GMT, though the week's key economic figure will be Friday's U.S. employment report for October.
The auto sector will be a focus as domestic U.S. car and truck sales figures for October are released, with no set time given.
((Reporting by Michael Flaherty; editing by Dan Burns;
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Enviado: 3/11/2004 13:40