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
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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