Analysts: Bush Victory Could Lift Wall Street Out Of Rut

By Agence France-Presse The re-election of President George W. Bush may lift Wall Street out of its rut, with sectors like pharmaceuticals, defense and oil expected to rally, but any follow-through depends on economic strength, analysts said. "We believe the market is likely to experience a near-term relief rally as a result of the likely quick resolution to the election and the absence of a repeat of 'Election 2000,'" said Sam Stovall, chief investment strategist at Standard & Poor's (S&P). "The bottom line is that the pro-business candidate appears to have won," said Merrill Lynch economist David Rosenberg. "Perhaps how investors should be looking at the situation is to consider what was likely avoided with a Kerry defeat -- basically, a potential return to a more regulated policy environment." "With respect to the environment and emission standards, the election results is likely to be positive for everything from utilities to coal producers to heavy manufacturers to autos," Rosenberg said. "With respect to drug pricing, the election result is likely to be constructive for the pharmaceutical sector. S&P's Stovall said he sees the market rebounding in areas that could have been hurt by a Kerry victory, including pharmaceuticals, health care, textile makers and importers and tech companies with a significant offshore presence. "What's more, defense contractors, energy companies and selected financial firms are likely to experience a firming of their share prices," he said. But Stovall said the market needs a solid fundamental economic backdrop, and that poses a challenge to the Bush administration in the face of high deficits and other issues. "Once the relief rally has run its course," he said, "the fundamental backdrop will reassert itself. The budget deficit remains the largest in history and likely precludes additional fiscal stimulus. In addition, S&P sees the value of the U.S. dollar continuing its slide in response to the enormous trade deficit." Copyright Agence France-Presse, 2004