The markets priced in a Barack Obama victory on Tuesday, and that is what they got.
Obama was elected the 44th president of the United States just after 11 pm ET, according to NBC News.
Investors Price In Obama
Investors may have been more accepting of an Obama win, said Clark Yingst of Joseph Gunnar, because of the people the Democratic nominee has surrounded himself with: “I think as investors have had more exposure to Obama, and more specifically his circle of economic advisors which reportedly include the likes of Buffett, Volcker, Summers, etc… less concern about what he just might do if in fact he wins the White House with Democratic control of the Congress and the Senate I think there is less concern about that going forward."
Altnerative energy, for instance, was particularly bullish on an Obama victory.
"Renewable energy stocks have been hot over the last 48 hours," said Jon Najarian, OptionMonster.com. "They’re partially responsible for the run.”
Market watchers also forecasted that the infrastructure and automotive sectors would benefit regardless of tonight's outcome.
“The one belief that there is out there is that there’s some kind of other spending stimulus package going on,” Pisani said. “I heard numbers as high as $300 billion and everyone seems to think that there’s going to be an enormous play around in infrastructure. There were proposals floating around the last several days—to have some kind of stimulus package for the auto industry in addition to being able to use the TARP program.”
Race for the White House
The votes were still being counted, with Barack Obama pulling away from McCain, but CNBC's Larry Kudlow said earlier in the evening that McCain could still win if he could take Indiana, Ohio, Florida, Virginia, Missouri and North Carolina. (Watch the video.)
“He cannot afford to loose a single one of those,” said Kudlow. (Read Kudlow's blog: Is Obama Swiping the Tax Cut Issue?)
McCain's loss of Pennsylvania's 21 electoral votes was seen as a “body blow," by Keith Boykin, a former Clinton White House aide. (Click here to watch that video.)
"If you look at the polls where they were before, he needed to win a Democratic state in order to take away the expected gains Obama would win in the republican states." Boykin said. "We still haven’t seen if Obama is going to win those states, but if he does I don’t know how McCain’s going to be able to make it, but it’s still too close.”
However, Kudlow believes that McCain still can have a road to victory without Pennsylvania. "I never believed Pennsylvania was truely in play," he said.
Kudlow believes that McCain must win the six states he previously mentioned plus Iowa and New Mexico.
"I see two good things for McCain," Kudlow later added, "Obama was encroaching Republican turf in Kansas and Georgia. McCain staved him off."
NBC News has projected McCain has won Idaho, Utah, Arizona, North Dakota, South Dakota, Nebraska, Texas, West Virginia, Louisiana, Arkansas, North Dakota, Wyoming, Kansas, Oklahoma, Tennessee, South Carolina, Alabama, Georgia and Kentucky, while Barack Obama has won California, Nevada, Oregon, Washington, New Mexico, Indiana, Washington DC, Ohio, Vermont, Pennsylvania, New York, New Hampshire, Maine, Massachusetts, New Jersey, Delaware, Connecticut, Maryland, Michigan, Illinois, Wisconsin, and Minnesota. “No surprises about Kentucky. No surprises about Vermont,” said Boykin. (Click here for electoral map.)
Obama's victory in Ohio was key, said John Harwood, because no Republican has won the White House in U.S. history without that state. (Watch the video.)
"I'm not sure any Republican could have won given the financial crisisthat developed in the middle of September when McCain's polls fell out of bed," said Kudlow.
Democrats expanded their control of the U.S. Senate with three key wins: Virginia, New Hampshire and North Carolina. Democrat Mark Warner was elected to fill the seat of retiring Republican John Warner, who is of no relation. Republican Elizabeth Dole was defeated in North Carolina, as was Republican John Sununu in New Hampshire.
Other key elections include the House race in Indiana between Robin Hayes (R) and Larry Kissell (D), and the House race in Connecticut between Christopher Shays (R) and Jim Himes (D), said Greg Valliere, of Stanford Financial Group.
“Certainly we’re going to have an expanded majority and I think that’s going to facilitate us working together with the next president of the United States, Barack Obama,” said Rep. Steny Hoyer (D-MD) Majority Leader. “What you’re going to see around the country is the election of people from districts that are not red, not blue, but purple.” (Click here to watch that interview.)
But BlackRock Vice Chairman Bob Doll said the Democrats would fall short of a clean majority.
“It looks like in recent polls that the Democrats are going to fall short of that 60and the market probably prefers that so the Democrats don’t have a run on getting things done,” said Bob Doll, BlackRock vice chairman.
Stock Market Rallies
So far, Tuesday's big winner was the stock market. The Dow closed up 305.45 points, or 3.3 percent, to close at 9625.28 today. It was the biggest Election Day rally for the Dow, topping the 1.2 percent gain when Ronald Reagan defeated Walter Mondale back in 1984. Before 1980, the market was closed on Election Day.
Many experts and analysts said that the rally was based on the fact that the market has priced in a Barack Obama win for tonight.
“Clearly the markets priced in fully an Obama victory,” said Paul Schatz of Heritage Capital (see video at right).
However, he adds that the market has not priced in a democratic sweep of the Senate: “If the democrats get 60 seats in the Senate, the markets not going to be happy tomorrow,” said Schatz.
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