Defense, drug and energy stocks, along with businesses seeking tax cuts, would benefit under a Republican Congress, corporate analysts said.
A shift in Senate control to Republicans in today's election would oust Democratic committee chairmen pushing to curb tax cuts or holding hearings on rising drug prices. They'd be replaced by Republicans pressing for more oil exploration, higher defense budgets, and limits on clean-air rules and lawsuit damage awards.
Senator Edward Kennedy of Massachusetts, for example, a foe of drug industry proposals to expand prescription insurance coverage for the elderly, would be replaced on the Health, Education, Labor and Pensions Committee by New Hampshire's Judd Gregg, who backs the industry's position.
Among companies that could benefit are power plant owners such as Duke Energy Corp, oil companies such as Exxon Mobil Corp and Sunoco Inc, arms makers including Lockheed Martin Corp, Boeing Co and Raytheon Co and drug makers such as Merck & Co, Pfizer Inc and Eli Lilly & Co.
"You would see a relief rally, for example in the drug sector," said Andy Laperriere, managing director at International Strategy & Investment.
Jon Jacobs, a fixed income analyst at IDEAglobal Inc, a New York research firm, said a Republican Congress would initially trigger rises in equities and the dollar. Treasuries would suffer, he said, as investors move cash into stock markets, anticipating bigger returns.
Polls and other soundings around the country indicate that many key elections for Senate and House will be close. In the departing Congress, Republicans held a 15-vote majority in the House and Democrats a one-vote edge in the Senate.
Any advance of companies' agenda might collide with the limits imposed by Senate rules, analysts said. The most optimistic predictions for Republican gains at the polls fall short of the 60 votes the party needs to end floor debate and proceed with most Senate votes.
"Unless they can round up 60 votes, the Senate is likely to have the same gridlock as this year," said Ira Loss, an analyst at Washington Analysis who covers government health policy for institutional investors.
Still, the party in control can choose topics for hearings and decide which proposals make the legislative docket.
"If you have unified party government, at least you can control the agenda and control what everyone's talking about," said James Thurber, a political scientist at American University in Washington.
Republican control could boost drug makers trying to head off Democratic proposals for adding prescription drug coverage to the Medicare health insurance program, and military contractors that may be in line for additional defense spending backed by Republicans.
Seventy-three percent of drug industry donations to parties and candidates, by trade groups and corporate political action committees, have gone to Republicans in tallies through early September, according to the Center for Responsive Politics.
The oil industry percentage is higher, with 80 percent going to Republicans.
Energy companies would get a boost from Republican control if the Senate gave final approval to US$33.5 billion in tax breaks and subsidies for oil, gas and other traditional energy producers.
Democrats oppose the measure.
Democratic strategists including James Carville rejoiced earlier this year at revelations about wrongdoing at the now-bankrupt Enron Corp and WorldCom Inc, saying corporate accounting scandals would enrage voters and sweep out Republicans.
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