Reuters
Elections to Move Stocks in Short Term
Sunday October 31, 2:56 pm ET
By Anupama Chandrasekaran
NEW YORK (Reuters) - The outcome -- or lack of it -- of Tuesday's U.S. presidential contest will move stocks in the short term, but the election effect likely will wear off quickly as oil and interest rates take the baton, analysts said.
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The day after the Nov. 2 election, the Dow Jones industrial average (^DJI - News) is expected to rise 1 percent on average if Republican President Bush wins. The index could lose 1 percent if Democratic challenger Sen. John Kerry wears the crown, according to a study by independent economic consultant 4Cast Inc.
In the event of no clear winner, equities could slide 2 percent, the survey found.
But once the winner becomes clear, investors will focus on energy prices and interest rates since their rise could negatively impact corporate profits and consumer spending. The record budget deficit and the Iraq's first post-war election early next year will also loom large, strategists said.
"Geopolitical risks are going to be with us for a long time and it will ebb and flow with news from Iraq and the Middle East," said Leo Grohowski, chief investment officer for Deutsche Asset Management Americas.
"If we see energy at $60 to $70 a barrel, that will impede economic growth and if we get a jump in interest rates and a jump in inflation that will spook the consumer."
Elections to Move Stocks in Short Term
Sunday October 31, 2:56 pm ET
By Anupama Chandrasekaran
NEW YORK (Reuters) - The outcome -- or lack of it -- of Tuesday's U.S. presidential contest will move stocks in the short term, but the election effect likely will wear off quickly as oil and interest rates take the baton, analysts said.
ADVERTISEMENT
The day after the Nov. 2 election, the Dow Jones industrial average (^DJI - News) is expected to rise 1 percent on average if Republican President Bush wins. The index could lose 1 percent if Democratic challenger Sen. John Kerry wears the crown, according to a study by independent economic consultant 4Cast Inc.
In the event of no clear winner, equities could slide 2 percent, the survey found.
But once the winner becomes clear, investors will focus on energy prices and interest rates since their rise could negatively impact corporate profits and consumer spending. The record budget deficit and the Iraq's first post-war election early next year will also loom large, strategists said.
"Geopolitical risks are going to be with us for a long time and it will ebb and flow with news from Iraq and the Middle East," said Leo Grohowski, chief investment officer for Deutsche Asset Management Americas.
"If we see energy at $60 to $70 a barrel, that will impede economic growth and if we get a jump in interest rates and a jump in inflation that will spook the consumer."
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