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Wall Street betting on Coakley defeat

UPDATED at 6 p.m. with market closing numbers:

Political reporters have been framing the Massachusetts special election to fill the seat of the late Sen. Ted Kennedy (D) as a referendum on President Obama and the Democratic Party heading into the midterm elections in November.

It may be that, but on the Street, it's a dollars-and-cents bet by traders that Democratic candidate Martha Coakley, whom less-than-charitable pundits have begun calling "Choakley," is going to lose and the Senate seat will go to Republican candidate Scott Brown.

Which is why health stocks rose sharply today, leading a big rally.

The Dow closed up 1.1 percent, the broader S&P 500 closed up 1.3 percent and the tech-heavy Nasdaq closed up 1.4 percent.

Health stocks such as Aetna (up 4.2 percent), Humana (7 percent), Merck (2.9 percent), Eli Lilly (4.4 percent), Pfizer (2.6 percent) and United Health Group (4.1 percent) all closed up today, as traders believed a Brown victory will sap Democratic power in the Senate and dim the prospects of a health-care reform bill they deem costly to health companies.

"Health-care stocks are likely to rally in the event of a GOP Senate seat win given the implied higher odds that health reform efforts are thwarted, notwithstanding investor comfort with the Senate version of reform has increased significantly over the past three months," Goldman Sachs analyst Matthew Borsch told the Wall Street Journal.

Shares of many of the health stocks have been rising, in fact, in recent weeks, in direct correlation to Coakley's drop in the polls.

-- Frank Ahrens
Follow me on Twitter at @theticker

By Frank Ahrens  |  January 19, 2010; 6:00 PM ET
Categories:  Congress , The Ticker , Wall Street  | Tags: Aetna, Coakley, Humana, Merck, Pfizer, Ted Kennedy, United Health Group  
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Comments

Market wisdom has led us to such marvelous decisions, like the near collapse of our economy last year. It's cheering to think that our health care will remain in corporate control. The fact that health stocks have risen with Coakley's poll declines may or not be related. You might be able to take random statistics to prove that people with large refrigerators are more likely to commit murder.

Posted by: eaglepeak | January 19, 2010 2:01 PM | Report abuse

Wall Street may be celebrating a bit too fast. The voters want outsourcing ended, want guest worker visa programs like the H1-B end, want the whole free trade Ponzi scheme ended. If we get our way, and I assure you we will, because we'll play musical chairs with the careers of politician's who don't get "it", we will bring back trade tariffs, duties, fees, and enact punitive taxes on investors and investments that result OR RESULTED (go back 16 years) in outsourced jobs. We mean, by any means necessary, to get those 44 million outsourced jobs back.

Posted by: mibrooks27 | January 19, 2010 2:16 PM | Report abuse

Actually, the health care and insurance companies have done a masterful job of covering their bets. If the reform package passes, industry will benefit from the largest mandated transfer of private wealth to corporate coffers in history. That's why, as the Senate bill emerged last quarter, the health care and insurance stocks outperformed other stocks by two to one.
If, on the other hand, the health care legislation fails, insurers and providers will continue to gouge American consumers.
Either way, they win and we lose...unless you own their stocks, which I refuse to do as a matter of patriotic principle.

Posted by: mtpeaks | January 19, 2010 2:37 PM | Report abuse

This says it all. If you want the big health monopolies to keep rolling in the dough and exploiting Americans, vote for Brown.

Posted by: Eugene6 | January 19, 2010 2:44 PM | Report abuse


Eugene6, mtpeaks - No one cares about healthcare except a very few nitwits that don't understand what Obama and the Congress have done. The voters care about JOBS!

Posted by: mibrooks27 | January 19, 2010 3:35 PM | Report abuse

I believe that we are seeing a hopeful signal from the voters in Massachusetts. News stories have reported voter dismay with the proposed bill's high cost at a time when a record number of Americans (about 30 million) are either unemployed or underemployed. The elites want the voters to approve such things as taxpayer - funded healthcare benefits for the massive immigrant population (both legal and illegal.) News accounts indicate strong voter turnout for a special election.

Going back to November, 2008, one of the main reasons that voters supported Obama was concerns about increasing unemployment. Obama has chosen to focus on divisive issues such as healthcare and immigration, rather than promoting policies that would re-employ Americans. I believe that this emphasis on special-interest politics presages massive Democratic losses in November, 2010. I hope centrist Democrats understand the reasons for voter disappointment and anger now.

Posted by: Dr_Gene_Nelson | January 19, 2010 3:40 PM | Report abuse

Yeah there you go mibrooks27! Another of his H1B and outsoourcing rant posted here when the debate is on stock prices going up on anticipated Mass election results.

Anyone who has gone through some medical treatment in America knows how flawed and expensive it has become. True US has got to curb illegal immigration from across the border (Mexico, South America), as much of those immigrants are those with little skills or education, other than ability to cut the grass or climb up trees to cut leaves. Real progress can not be made via corporate profiteering. Rather it happens by equitable distribution of goods and services to people who have the ability and wherewithal to buy those. Right now, much of America is bankrupt, except Wall Street, and that too due to American tax dollars. In the larger interests of the country, I hope the democrat would win .

Posted by: hughes_168 | January 19, 2010 4:03 PM | Report abuse

what fuzzes me is how can non-rich, self-described "patriotic" republicans (who will get gouged as much as the rest of us) see health reform as being against their interests. don't understand that. i also don't understand why democrats would allow the health companies to continue to prosper, regardless of whether or not the "reform" is passed. if it truly is not a reform package, then all of US who know why reform needs to pass should then start kicking some u no wut!

Posted by: dcjazzman | January 19, 2010 4:34 PM | Report abuse

what fuzzes me is how can non-rich, self-described "patriotic" republicans (who will get gouged as much as the rest of us) see health reform as being against their interests. don't understand that. i also don't understand why democrats would allow the health companies to continue to prosper, regardless of whether or not the "reform" is passed. if it truly is not a reform package, then all of US who know why reform needs to pass should then start kicking some u no wut!

Posted by: dcjazzman

****************************************************

The Senate bill became a bloated mess due to even 59 seats requiring a "pay to play" charade. I'd rather they pass it than nothing at all since these things are basically impossible to fully eliminate and we could reform the bill as we figure out what does or doesn't work. The health insurance industry knows this and is gleeful that another brown shirt might slime their way into Congress and keep anything positive from being passed for the American people.

As a bit of nasty payback if Brown wins I say we get a bill signed in the next week for the Senate bill and then a supplemental one that lifts the anti-trust exemptions from these parasites.

Posted by: theobserver4 | January 19, 2010 4:43 PM | Report abuse

The Republicans don't want America to be a democracy.
This is clear. The Republicans want to live like aristocrats and treat everyone else as peasants. The Republicans are therefore unAmerican. The next American Revolution will clearly happen in 2010 to expel the Republicans from America. The Republicans in the House and the Senate don't represent We The People whatsoever. There should be no lobbyists and no electoral college. Congress is the bottleneck preventing change in America and preventing progress and innovation and jobs and health care for all.

Posted by: blakesouthwood | January 19, 2010 6:04 PM | Report abuse

to blakesouthwoods rant,- republicans have not had control of anything for the past 4 years. "progress for all"(left speak) , was a national socialist slogan. (whoever they were). "jobs for all" comes from the individual not from your "progressive" congress. recognise that this nation was designed to be a republic ,not a welfare state. giving congress the ability to set its own salary was the doom of the republic,

Posted by: calkid1 | January 19, 2010 9:00 PM | Report abuse

Yo blakesouthgotwood, Va and Mass just elected republicans in democrat controlled states. Read between the lines...November is
not going to be good for Democrats....and
yes the democratically controlled house is
a bottleneck, but November is coming....
Innovation? Stimulus was innovation, and that
hasn't worked. Health Care reform pushed through with bribes, closed eyes, and who
knows what went on in Reid's office! Maybe Harry was doing his Clinton Hi Monica routine...

Posted by: diverkenster | January 19, 2010 10:02 PM | Report abuse

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