Energy seen getting biggest boost from Republican Senate

Wed Nov 5, 2014 12:08pm EST
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By Rodrigo Campos and Ryan Vlastelica

NEW YORK (Reuters) - While the Republican Party won't assume its Senate majority until January, U.S. stock investors are already betting the new congressional makeup could lead to faster action on pipelines and trade agreements, sending energy shares higher on Wednesday.

Wall Street rose broadly in its first session after midterm elections, but energy and medical device companies - two sectors that could see a more direct impact from legislative measures - had outsized moves.

Part of the broader market's move came on relief that the Senate majority party was not in doubt; investors had been concerned some close races would be forced into run-offs, an outcome that could have delayed knowing who would control Congress's upper chamber for weeks.

"It had looked like some of the races would be very close and that we might not know who controlled the Senate, but in the end, the results were pretty decisive," said John Carey, portfolio manager at Pioneer Investment Management in Boston. "That's good news for the industries that had been subject to regulatory issues."

The S&P Energy sector .SPNY rose 1.5 percent on hopes Republican control of the Senate will lead to reforms in crude and natural gas export laws, as well as motivate the Obama administration to include those energy exports in new, or broader, trade agreements.

TransCanada Corp (TRP.N: Quote) had one of the biggest election-related bounces, jumping 2.4 percent to $49.51 on the New York Stock Exchange. The Canadian company's Keystone XL pipeline project may find easier approval with a Republican-led Senate.

The jump in energy was partially fueled by its recent weakness. The group is the sole industry group in the S&P 500 with negative year-to-date returns, pressured by a massive drop in the price of crude oil.

Other issues that may also find traction under Republicans include a potential repeal of the medical-device tax that is part of the Affordable Care Act, which could benefit the healthcare technology sector. Medical device maker Stryker (SYK.N: Quote) rose 0.3 percent to $87.91, roughly in line with the broader market, while Medtronic Inc (MDT.N: Quote) added 1.3 percent to $68.87.   Continued...

Voters cast ballots at a polling place in the Neptune Society's Columbarium in San Francisco.