Wall Street Awaits Election Results

Traders surround the post that handles shares of MasterCard on the floor of the New York Stock Exchange, Wednesday Nov. 1, 2006. MasterCard Inc., owner of the nation's second-largest credit card brand, said Wednesday its third-quarter profit climbed 82 percent, reflecting increased revenue and a higher number of purchases worldwide. Its shares climbed more than 15 percent in morning trading. (AP Photo/Richard Drew) (Richard Drew - AP)

NEW YORK -- Investors will be looking to Washington in the coming week, not for more of the economic numbers that have weighed so heavily on the markets in recent weeks, but to determine whether the winners in Tuesday's midterm elections will pursue an agenda that could affect business interests.

Although professional investors are often viewed as politically conservative, Wall Street likes what many voters hate: gridlock. The Street likes to mitigate as many risks as possible, so a moribund, non-activist government is often seen as one less variable businesses must contend with.

Investors will be waiting to see whether Democrats will make inroads, as polls have repeatedly suggested, and perhaps shift the balance of power in Washington and in state capitals.

Wall Street will have more time to focus on the elections because fewer economic and earnings numbers are expected this week than during the past month. A few big names such as Cisco Systems Inc. and The Walt Disney Co. are scheduled to report.

The lighter economic calendar will be viewed as good news by some wary investors. Much of the recent economic news unnerved investors hoping for signs of a gradual slowdown in the economy. Many on Wall Street interpreted the severity of readings in areas such as productivity, manufacturing and overall economic growth as indicating the economy was slowing too quickly.

Stocks, which rose sharply in October as investors bet that the economy was poised to pull off a soft landing, lost ground last week as that notion frayed. The Dow Jones industrial average ended the week down 0.86 percent, while the Standard & Poors 500 index was down 0.95 percent and the Nasdaq composite index was down 0.84 percent. However, despite the week's losses, Friday brought a respite from the flow of negative economic news with a Labor Department report that the unemployment rate fell to its lowest level in five years. Higher oil prices soured investor sentiment, however.

This week, investors will be watching to see whether voters concerned about the wars in Iraq and Afghanistan as well as the economy will find some solace in the latest job figures and the strength the stock markets showed in October when they cast their vote.

ECONOMIC DATA

While voters head to the polls Tuesday, Wall Street expects to receive the Federal Reserve's September consumer credit report.

Wednesday brings a weekly reading of crude inventories; surprise readings in recent weeks have shifted oil prices.

On Thursday, the Commerce Department's report on import and export prices for October could give Wall Street insight on inflation; the figures help show what consumers pay for foreign-made goods. The Labor Department surprised investors last week with a report that wages rose nearly 4 percent in the third quarter, prompting concerns about inflation. The Fed isn't likely to lower interest rates until it deems inflation is contained.

The Commerce Department is also expected to issue its report on September's trade deficit Thursday. The previous figures showed the country's trade deficit ballooned to a record $69.9 billion in August as oil imports increased.