Wall Street bets on a GOP win in Massachusetts
Wall Street thinks it knows the outcome of today’s Massachusetts special election for the late Ted Kennedy’s Senate seat.
Stocks are broadly higher, led by healthcare issues, as some investors bet that Kennedy’s seat will go to Republican challenger Scott Brown. That could deprive Democrats of the 60-vote majority they need in the Senate to stop a potential filibuster of the healthcare reform bill.
The Dow Jones industrial average was up 115 points, or 1.1%, to a 15-month high of 10,725 at about 12:58 p.m. PST, with two minutes left to go in the session.
But the rally has broadened well beyond healthcare: Rising stocks outnumber losers by 2,396 to 693 on the New York Stock Exchange, the strongest day for market breadth since Jan. 4.
The Massachusetts race has taken on much greater meaning, of course, because it represents a referendum on the Obama administration’s policies. Even a month ago, almost no one figured that the Democrats could lose Kennedy’s seat. Yet Brown has soared in the polls.
A Republican victory “would be less a healthcare story than a pro-business, Washington-gridlock story,” said Art Hogan, market strategist at brokerage Jefferies & Co. in New York. Investors betting on a win for Brown, Hogan said, are figuring that “all of the [Obama] anti-business things you can think of would get delayed if not derailed.”
Yet on the healthcare reform question, House Majority Leader Steny Hoyer (D-Md.) suggested that the Senate could approve its version of the reform program before Brown would be seated, should he win today’s election.
Jeffrey Saut, chief investment strategist at Raymond James & Associates, said the market could see a “blowoff to the upside” if Brown wins.
But Saut thinks that would be a good excuse to finally take profits after the market’s 10-month surge. The Dow is up 64% from its 12-year low in March, and the rally has been interrupted along the way by only modest pullbacks -- nothing even approaching a 10% “correction.”
“If it does jump, I think on a trading basis it would be time to take some money off the table,” Saut said.
-- Tom Petruno
Photo: Massachusetts State Sen. Scott Brown, the Republican challenger to state Atty. Gen. Martha Coakley for Ted Kennedy's U.S. Senate seat. Credit: Robert F. Bukaty / Associated Press