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Election day gains lost on kerry victory concerns Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aZaHFCrtcrDM&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=aZaHFCrtcrDM&refer=home
U.S. Stocks Fail to Hold Gains on Concern About Kerry Victory
Nov. 2 (Bloomberg) -- U.S. stocks failed to hold gains, sending the Dow Jones Industrial Average lower, on concern that Senator John Kerry may unseat President George W. Bush.
The Standard & Poor's 500 Index erased most of its advance and the Dow average snapped a five-day rally in the last 90 minutes of trading. Speculation that exit polls showed Kerry with a lead in the presidential election spurred the retreat.
``There's the old saying that the market favors Republicans and incumbents, and the fact that we opened stronger shows (Bush) was still favored,'' said Brian Pears, head of equity trading at Victory Capital Management, which has $46 billion in Cleveland. ``It looks like Kerry is doing better than expected and that caused a selloff.''
The Dow average shed 18.66, or 0.2 percent, to 10,035.73. The S&P 500 was little changed, up 0.07 at 1130.58. Drugmakers such as Pfizer Inc. and utilities including Duke Energy Corp. weighed on the benchmark on concern the policies of a Kerry administration would hurt those industries. The Nasdaq Composite Index added 4.92, or 0.3 percent, to 1984.79.
Ten stocks fell for every nine that rose on the New York Stock Exchange. Some 1.67 billion shares changed hands on the Big Board, 24 percent more than the three-month daily average.
The Dow average had risen as much as 0.8 percent, while the S&P 500 climbed 0.9 percent on the prospect that the aftermath of the election would produce a market rally and as oil prices declined. Speculation that Kerry was leading Bush in some swing states helped erase that advance.
Kerry Futures
Kerry led Bush by 18.1 percentage points in trading on the Iowa Electronic Markets, a not-for-profit political betting system run by the University of Iowa, as of 4 p.m. New York time. Kerry held a 16 percentage-point lead on Intrade, an electronic betting exchange based in Dublin known by its web site TradeSports.com.
Two hours earlier, Bush had a 3.8 percentage-point advantage over Kerry on the Iowa market and a 13.5 percentage-point lead on Intrade.
``There is some concern about change,'' said Wayne Reisner, who helps manage $1.8 billion at Carret Asset Management LLC Co. in New York. ``It's fear of the unknown -- better the devil you know.''
Some investors, including SouthTrust Bank of Alabama's Jon Goebel, said stocks may decline if the challenger wins.
``With Kerry there's the possibility of higher taxes next year,'' said Goebel, who oversees $5 billion as the firm's chief investment officer. ``You'd like to think this is already reflected in the market, but I think it isn't.''
5 Percent Decline
A Kerry victory would spur a decline of as much as 5 percent in stocks, according to a report last week by Tobias Levkovich, chief U.S. equity strategist for Citigroup Global Markets Inc. He did not specify the timeframe for such a move.
Pfizer, the world's biggest drugmaker, fell 10 cents to $28.70, while Merck & Co. lost $1.48 to $26.80. An S&P 500 index of drugmakers dropped 1.1 percent on concern Kerry would allow health plans to negotiate lower prices with drug companies.
An index of utility companies, whose shares are attractive to investors because of their dividends, had the biggest decline among the S&P 500's 24 industry groups. The gauge dropped 1.7 percent as a Kerry administration may seek to roll back Bush's dividend-tax reduction.
Duke, the No. 1 U.S. utility owner, slid 56 cents to $24.32. TXU Corp., owner of Texas's largest power company, shed $1.43 to $59.60. Duke and TXU pay dividends equal to 4.5 percent and 3.8 percent of their share prices, respectively, compared with the S&P 500's 1.7 percent dividend yield.
Energy Shares
Energy companies, which would stand to gain from Bush's efforts to increase oil production and exploration, fell. Nabors Industries Ltd., the world's largest onshore oil and natural-gas driller, slid 96 cents to $47.55.
A drop in oil prices also sent the group lower. Crude oil for December delivery fell 1 percent to $49.62 a barrel in New York. Oil last closed below $50 on Oct. 4.
Gold miners declined as the precious metal's price had its biggest drop in two months. Gold for December delivery fell 1.1 percent to $423.60 an ounce.
Newmont Mining Corp., the world's biggest gold producer, lost $1.01 to $45.81. Smaller rival Placer Dome Inc. retreated 55 cents to $20.55.
Earnings
BMC Software Inc. slumped $2.32, or 12 percent, to $17.02, for the steepest drop in the S&P 500. The maker of software to manage corporate networks said fiscal second-quarter maintenance revenue missed its forecast. Revenue from repairs accounts for more than half of the company's total sales.
International Game Technology, the world's biggest slot- machine maker by sales, jumped $1.80 to $34.89. Its 6.2 percent climb made it the S&P 500's best performer. The company said it had a fiscal fourth-quarter profit excluding some items of 35 cents a share, beating the Thomson estimate by 2 cents.
Steelmakers rallied after Goldman, Sachs & Co. analyst Aldo Mazzaferro said steel prices will have ``only a modest decline'' next year.
Nucor Corp., the biggest U.S. maker of steel from recycled metal, added $2.07, or 4.8 percent, to $44.96, for the second- biggest gain in the S&P 500. U.S. Steel Corp., the No. 1 steel producer in the Americas, rose $1.18 to $38.90. Mazzaferro boosted the stocks to ``outperform'' from ``in-line.''
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