There have been no shortage of polls in the last few weeks indicating that Obama is pulling away from Romney — from obvious blue states like Washington to battlegrounds like Wisconsin to the mother of all surveys, the CNN poll of polls.
And after last night’s debates, there will be no shortage of predictions, punditry and politicking over who has momentum in the last month before Election Day.
But as an investor, the one metric you should care about most isn’t a measure of popular sentiment or partisan hackery. It’s a new paper from LPL Financial Research showing how Wall Street is betting, and what way stocks are leaning in anticipation of the election.
And according to the investment firm, investors are voting loud and clear for Barack Obama.
Here’s the gist: The investment firm is weighting certain sectors as blue and others as red. For instance, Democrats are big on universal health care and natural gas as a cleaner fossil fuel — so there’s a focus on life science companies like Medtronic (NYSE:MDT), St. Jude (NYSE:STJ) and Boston Medical (NYSE:BSX) and natural gas stocks like Cheniere (NYSEAMEX:LNG).
On the other side of the aisle, the GOP is big on offshore drilling and (shocker) loose bank regulations, so financial stocks including heavyweights Bank of America (NYSE:BAC) to smaller players like Regions Financial (NYSE:RF) as well as oil service stocks like Transocean (NYSE:RIG) and Halliburton (NYSE:HAL) are labeled as Republican indicators.
Get it? Good. Now check this out, direct from LPL:
In the past week ending Wednesday, the LPL Financial “Wall Street” Election Poll Index reflected a further move toward Democrats, setting another new high for Democrat-favored industries relative to those favored by Republicans. The market continues to increasingly reflect a status quo election outcome.
Over the past week, the overall market rose. Most industries in both the Democrat and Republican indexes rose, but the strongest gains were seen in the Democrat-favored Homebuilding and Health Care Facilities industries. Republican-favored industries that saw solid gains last week were the Diversified Financials and Managed Care.
In short, Wall Street is buying the blue stocks — anticipating an Obama victory.
This next chart shows a kind of horserace between the sectors (voters love polls and approval charts, right?) that tells the story dramatically in a simple visual.
So the bottom line for investors is that it may not even matter whether Romney really “won” the debate last night or not. (Personally, I think he did — attacking the president’s record while Obama dumped way too many numbers on voters.)
The reality is that in the eyes of Wall Street and which stocks are rising, Obama may have this thing as good as won.
Original source: The “Wall Street” Election Poll
- Full transcript of the debate (Washington Post)
- Jim Lehrer was the REAL loser last night. (Fox News)
- Most agree: Romney came out on top in the debate (Politico)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.
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