Stocks Soar in Early Hours
Market Rallies on Hope
For Election Conclusion
By BRIAN R. FITZGERALD
THE WALL STREET JOURNAL ONLINE
November 3, 2004 11:31 a.m.
The stock market surged Wednesday – the health-care and pharmaceutical industries got the biggest boost – as investors seemingly signaled their vote for four more years of a business-friendly administration.
Trading was heavy in the early hours as mostly dormant investors put their money to work. “It truly is a relief rally,” said Paul J. Nolte, director of investments at Hinsdale Associates. “The market was hoping for a Bush victory. ? The trick is to see if the market can hold it. If we fade in the last hour of trading, it calls into question the underlying economics.” Either candidate would take office “looking at an economy not on its feet,” he said.
The Dow Jones Industrial Average soared 143.19 points, or 1.4%, to 10178.92. The Standard & Poor’s 500-stock index surged 15.54, or 1.4%, to 1146.10. The technology-heavy Nasdaq Composite Index bounded up 28.22, or 1.4%, to 2013.01. Trading was frenetic, and the number of advancing stocks trounced decliners on the New York Stock Exchange and the Nasdaq Stock Market.
The gains, to be sure, were broad-based: Among Dow components, Altria Group added 2.4%, Boeing rose 3.2%, and Honeywell gained 2%. Small-capitalization stocks jumped, too, with the Russell 2000 index up 1.8%.
President Bush moved closer to winning re-election last night in a tight race against the Democratic challenger, Sen. John Kerry. A concession from Mr. Kerry appeared at hand, according to various news reports.
It’s well documented how much was at stake in this election – the potential for one or two Supreme Court vacancies, as well as naming the next chief of the Federal Reserve. Uncertainty over the election’s outcome has flustered Wall Street for months, and analysts have said a clear victory for either candidate would give stocks a shot in the arm that could last until the end of the year.
But for investors, there is a lot at stake, too, particularly in the health-care sector. And a Republican administration appears to be their preference.
Some investors feared “Kerry was going to heavily regulate” those industries, said Nancy Weaver, who covers the health-care sector for Stephens Inc. “There was concern over who would run centers for Medicare, Medicaid, the FDA – that there could be a slowdown in new drug approvals and reforms.”
A Bush administration likely will take a stand against importation of drugs from Canada. Although, he has clamped down on stem-cell research, certainly not a pro-biotechnology position, Mr. Nolte said. Part of the health-care rally could be simply because “these stocks have been beaten up this year,” he said.
The sector legged out some of the morning’s biggest gains: Eli Lilly soared 6.2%, Wyeth surged 5.1%, Amgen gained 5.6%, Pfizer was up 4.9%, Johnson & Johnson climbed 2.9%, Guidant netted 2.4%. Even Merck, which couldn’t catch a break at all recently, was up 1.8%. Aetna was up 4.6%.
The Treasury market had modest losses in morning trading today, as investors who sought the safety of U.S.-backed bonds unwound their positions on the prospect of a clear-cut win for Mr. Bush. The 10-year note lost close to 3/4 point, and the yield was up past 4.1%, while the 30-year bond lost more than a point. But that other investor safe house, gold, was up about $3.50 an ounce, signaling some investors aren’t that convinced the race is through.
Overseas, financial markets rallied. Stock markets in Asia made steady gains after a slow start as Mr. Bush appeared to consolidate his lead. Trading in Tokyo was closed for a holiday, but Hong Kong was up almost 1%, and South Korea gained 1.7%. The dollar rose against the yen.
In Europe, the gains were less impressive. Major markets in London, France and Germany were only slightly higher midday, and the euro crept slightly higher against the dollar, furthering its gains over the past few weeks.
Oil prices, which are marching to their own beat, stumbled again Wednesday. The December crude contract was down 13 cents at $49.49 a barrel on the New York Mercantile Exchange. Oil prices could fall even further if the government’s weekly petroleum-inventory report today shows more increases.
Later today, the U.S. Commerce Department is slated to report on September factory orders. Also, major auto makers report October sales results today.
In major U.S. market action Wednesday:
Stocks surged. On the Big Board, where 673.4 million shares traded, 2,424 stocks rose and 678 fell. On the Nasdaq Stock Market, where volume was 788 million shares, 2,134 stocks advanced and 680 declined.
Bonds were thumped. The 10-year Treasury note fell 21/32 point, or $6.5625 for each $1,000 invested. The yield rose to 4.14%. The 30-year bond was off 31/32 to yield 4.88%.
The dollar weakened. It traded at ?106.07, up from ?106.16, while the euro rose against the dollar to $1.2795 from $1.2726.
Write to Brian R. Fitzgerald at firstname.lastname@example.org