The stock markets staged a modest rally Wednesday as Wall Street embraced President Bush's reelection and cheered the absence of a prolonged legal fight for the White House.

Investors began snapping up stocks as soon as the market opened, reacting to what appeared to be a solid win for Bush on Tuesday night, even though Massachusetts Sen. John F. Kerry had yet to concede. Share prices jumped again, though not by as much, when reports began began to circulate that Kerry would concede, which he did around 2 p.m.

The Dow Jones industrial average of 30 blue-chip stocks ended the day up 101.32 points, or 1 percent, at 10,137.05. The broader Standard & Poor's 500-stock index gained 12.64 points, or 1.1 percent, to close at 1143.20. The technology-heavy Nasdaq composite index added 19.54 points, or 1 percent, to close at 2004.33.

Treasury bonds, which rallied on Tuesday as investors sought safety in an uncertain political environment, retreated on Wednesday. The yield on the benchmark 10-year Treasury note, which moves in the opposite direction of price, closed at 4.08 percent, up from 4.05 percent.

Oil prices increased, closing above $50 a barrel. Prices had come down in recent days, partially because traders thought a Kerry victory would mean the United States would stop adding oil to the Strategic Petroleum Reserve while prices remained high, freeing additional barrels for sale on the market. The Bush administration has continued to fill the reserve.

U.S. benchmark crude for December delivery closed at $50.88 a barrel on the New York Mercantile Exchange, up from $49.62 the day before.

Some Wall Street analysts and traders attributed Wednesday's stock market rally more to relief that the nation would not have to endure weeks of legal wrangling than to any deep enthusiasm for Bush's policies. The rally eased as the day wore on and received little boost from Bush's victory speech, delivered shortly after 3 p.m.

"I doubt beyond today that we are going to see much of a presidential election effect," said Laurence G. Kantor, chief economist and head of market strategy at Barclays Capital. "After reports about what a mess this could have been, with both sides hiring armies of lawyers, this was more a one-day knee-jerk reaction that, 'Okay, we've got a victor.' "

Kantor said neither candidate had presented concrete plans on issues such as deficit reduction that could significantly impact the stock market. He also said either Bush or Kerry would have continued to spend heavily on defense to continue the war in Iraq and the war on terrorism. Historically, stocks have fared slightly better under Democrats than under Republicans.

But other market observers saw more of a Bush-specific effect on Wednesday, noting that energy, pharmaceutical and defense stocks all staged rallies. Bush is viewed as much more favorable to all three industries than Kerry.

Shares in drugmaker Merck rose $1.07, or 4 percent, to close at $27.87. Pfizer shares gained 75 cents, or 2.6 percent, to close at $29.45.

In the energy sector, Exxon Mobil rose 84 cents, or 1.7 percent, to close at $49.27. Halliburton, the oil services firm formerly headed by Vice President Cheney and the subject of controversy for its contracts in Iraq, rose $1.54, or 4.3 percent, to close at $37.08.

In the defense sector, Raytheon rose 79 cents, or 2.2 percent, to close at $37.55. Bethesda-based Lockheed Martin added $1.78, or 3.3 percent, to close at $55.89.

By contrast, stocks involved in research on human embryonic stem cells fell Wednesday. Kerry is a strong supporter of stem cell research. Shares in StemCells Inc. dropped 97 cents, or 24 percent, to finish at $3.14. Aastrom Biosciences lost 22 cents, or 16 percent, to close at $1.17.

Shares in Columbia-based chemical firm W.R. Grace rose $1.51, or 14.3 percent, to close at $12.10 on hopes that Republican victories on Tuesday would boost chances for the creation of a trust fund to end asbestos-related accidents.

"I'd say about 30 percent of the rally is the fact that we don't have a contested election, 20 percent is that the uncertainty of the election is out of the way, and 50 percent is that Bush is back in office and there is continuity," Matthew W. Johnson, head of stock trading at Lehman Brothers Inc., said Wednesday afternoon.

Johnson said Bush's pledge to extend his tax cuts, especially on stock dividend payments, was popular on Wall Street. "With Bush, you certainly know what you are going to get, and with Kerry there were possible ramifications for the market from an increase in taxes, especially as it relates to dividends."

However, in a note to clients, chief Merrill Lynch strategist Richard Bernstein said the dividend tax cut has had little measurable effect on the stock market. And he said the current policies of high spending and tax cuts would prove unsustainable under either candidate.

"It seems to us that taxes will be raised in one form or another in 2005-2006 whoever is elected," Bernstein wrote, prior to the definitive outcome of the election. "Investors should watch carefully for the accompanying slowdown in consumer discretionary spending and potential for lower long-term interest rates."

Historically, stocks have performed well in the final two months of a presidential election year. But some analysts urged caution Wednesday, suggesting that Bush's win does not alter underlying problems facing the market.

"Once the relief rally has run its course, we believe the fundamental backdrop will reassert itself," Standard & Poor's chief investment strategist Sam Stovall wrote in a note to clients Wednesday. "The budget deficit will remain the largest in history and likely precludes additional fiscal stimulus. In addition, we see the value of the U.S. dollar continuing its slide in response to the enormous trade deficit."

Stovall added, "Over the next four years, we think President Bush, like President Reagan in his second term, will have to turn his focus from recovery to reform. Not only on tax reform, but also tort and health care reform."

Other Indicators

* The New York Stock Exchange composite index rose 85.93, to 6787.40; the American Stock Exchange index rose 18.06, to 1323.32; and the Russell 2000 index of smaller-company stocks rose 9.89, to 595.33.

* Advancing issues outnumbered declining ones by 3 to 1 on the NYSE, where trading volume rose to 1.77 billion shares, from 1.66 billion on Tuesday. On the Nasdaq Stock Market, advancers outnumbered decliners by 35 to 1 and volume totaled 1.95 billion, up from 1.84 billion.

* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 106.15 yen, down from 106.39 late Tuesday, and a euro bought $1.2821, up from $1.2674.

* Gold for current delivery rose to $424.60 a troy ounce, from $420.00 on Tuesday, on the New York Mercantile Exchange's Commodity Exchange.

Staff writer Justin Blum contributed to this report.

Traders at the New York Stock Exchange watch President Bush's acceptance speech, which came shortly after 3 p.m. Energy, drug and defense companies' stocks rose on news of President Bush's election victory.