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Business

Nov. 8, 2006, 10:28PM
Idea of tied-up Congress pushes Dow to new high

By TIM PARADIS
Associated Press

NEW YORK - Stock indexes rose for a third straight session Wednesday, with the Dow Jones industrials reaching another record close as investors grew more confident that a huge victory by Democrats in congressional elections would result in gridlock and keep lawmakers out of the way of business interests.

The market had largely expected Democrats to gain control of the House of Representatives, but an undecided Senate race in Virginia had, during early trading, unnerved investors who dislike such uncertainty. Stocks showed gains after the announcement that Defense Secretary Donald Rumsfeld would resign.

"I would think over the next several weeks that investors should return their focus to the likelihood for interest rate moves in the decelerating economic climate, the moderating earnings growth and the weakening housing market," said Elizabeth Weymouth, global investment specialist at JPMorgan Private Bank.

The Dow rose 19.77, or 0.16 percent, to 12,176.54. The blue chips closed above the record of 12,167.02 set on Oct. 26 and came within a few points of a record trading high of 12,196.32 reached Tuesday.

The Standard & Poor's 500 index was up 2.88, or 0.21 percent, at 1,385.72, and the Nasdaq composite index rose 9.06, or 0.38 percent, to 2,384.94.

Bonds rose, with the yield on the benchmark 10-year Treasury falling to 4.64 percent from 4.66 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.

The gains this week continue a run-up seen in October that was interrupted last week when a string of poor economic data sent stocks lower. Already this week the major indexes are up at least 1.5 percent.

Looking at the ramifications of the election, Weymouth said investors likely will consider whether Democrats might try to somehow cap prescription drug prices, increase the federal minimum wage or raise the 15 percent tax on some dividend gains.