12:00 ET Dow +79.64 at 12185.19, Nasdaq +20.38 at 2386.33, S&P +6.37 at 1386.15:
[BRIEFING.COM] The indices are trading near session highs midday as growing prospects of Congressional gridlock following today's mid-term elections helps to keep the underlying bullish tone intact.
With another quarter of double-digit earnings growth largely in the books and the absence of potentially weak economic data to rattle the market, investors are again showing little concern about Democrats potentially taking control of the House for the first time since 1994. After all, such a scenario has been predicted for some time now. However, since such a situation will create gridlock on Capitol Hill, should Republicans maintain control of the Senate that is, it can also be argued that a split Congress will likely not result in significant policy changes over the next two years, and that is being viewed as bullish for the stock market.
Stocks are also taking a bullish cue from a rally in bonds. Albeit getting an election-day boost as political uncertainty sparks some safe-haven refuge in Treasuries, bonds are getting some added help from Cleveland Fed President Sandra Pianalto, who warned last night that policy makers may have to raise rates if the pace of inflation doesn't wane soon. Fortunately for the bulls, which are more pre-occupied with the pace of economic growth than inflation for the time-being, Pianalto, a voting Fed member, also saying last night that the economy will withstand the housing slump and grow at a "moderate" pace appears to be lending some additional support.
The 10-year note is up 12 ticks to yield 4.65%, which bodes well for rate-sensitive stocks and eases valuation concerns tied to growth companies dependent on borrowing. As a result, influential sectors like Financials and Technology are providing some notable leadership.
Industrials (+1.1%), though, is turning in the best performance among the eight sectors posting gains. Boeing (BA 83.09 +2.61) is soaring 3.2% after FedEx (FDX 114.43 +0.49) cancelled an Airbus order and said it will now buy 15 new Boeing 777 Freighters. The sector is also benefiting from a better than expected Q4 report from Emerson Electric (EMR 88.80 +6.24) as well as an analyst upgrade on Southwest Airlines (LUV 15.44 +0.50), which positions Airlines (+3.4%) as one of today's best performing S&P industry groups.
DJTA +0.9... DJUA -0.1... SOX +2.5... DOT +0.7... XOI -0.2... Nasdaq +20.38 at 2386.33... S&P Midcap 400 +0.6... NYSE Adv/Dec 0/982... Nasdaq Adv/Dec 1963/927.
