Wall Street got what it wished for in the election--certainty at last.
The stock market staged a "relief rally" Tuesday before the results were officially reported, with early exit polls and political experts already seeing a consensus forming that the president would win re-election. Some market watchers see more gains in the days ahead, even as shares dipped today amid worries over the upcoming "fiscal cliff" standoff.
"The worst-case scenario heading into Wednesday would have been an election without a decision and having to wait for this thing to drag on a long time without a winner," says Art Hogan, managing director of Lazard Capital Markets. "The market will be relieved that we avoided that scenario."
Still, stock prices reversed their big election-day rally early on Wednesday, with the Dow Industrials off more than a percent in early trading. After a pause, though, investors will probably show renewed interest in buying shares, Hogan says, especially if Washington starts to work on a plan to avoid going over a fiscal cliff at year's end.
Market watchers had fretted that a "hung election," in which neither candidate won a majority, could have left the economy leaderless as it neared the across-the-board spending cuts and tax increases that could remove $600 billion from the economy at the start of 2013. With the opinion polls tightening over the last month, the Dow industrials shed 500 points amid mounting worries over a post-election leadership vacuum.