US STOCKS-Wall St rallies on vote but warning about gridlock

* Republicans poised to win House control, gain in Senate

* Fed’s Wednesday decision eyed, expectations high

* Dow up 0.7 pct, S&P up 0.8 pct, Nasdaq up 1 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to afternoon)

By Rodrigo Campos

NEW YORK, Nov 2 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) rose on Tuesday on
expectations the congressional elections outcome will be
bullish for business, though some warn gridlock could hurt the
nation’s ability to recover from a steep recession.

As voters cast their ballots, most polls show Republicans
regaining control of the U.S. House of Representatives, while
President Barack Obama’s Democrats could be left with a smaller
majority in the Senate. For details, see [ID:nN01165335].

The market’s gains can be attributed to the “euphoria
surrounding the likelihood of Republicans’ gains, coupled with
the continued price momentum in the stock market,” said Doug
Kass, president of Seabreeze Partners in Palm Beach, Florida.

Democrats currently have majorities in both the House and
Senate. A divided Congress is typically seen as bullish for
stocks as it passing new laws less likely and reduces
uncertainty for markets.

“Gridlock has historically been a plus for this market, but
I believe it’s different this time,” said Kass.

“The economy faces numerous challenges to growth that all
need to be addressed quickly. We have a government divided
after tonight, in my view, and this is not a price-earnings
expanding event,” he said. Kass said the market’s gains set the
stage for investors to sell.

The Dow Jones industrial average (.DJI: ) rose 76.82 points,
or 0.69 percent, to 11,201.44. The Standard & Poor’s 500 (.SPX: )
added 9.42 points, or 0.80 percent, to 1,193.80. The Nasdaq
Composite (.IXIC: ) rose 24.23 points, or 0.97 percent, to
2,529.07.

The Federal Reserve is expected to announce a program of
asset purchases of at least $500 billion to stimulate the
economy on Wednesday at the end of a two-day meeting that began
on Tuesday. For a special report, see
http://link.reuters.com/pyb23q

The U.S. benchmark S&P 500 has advanced almost 14 percent
since the start of September on hopes of further Fed action.

The U.S. dollar fell 0.75 percent against a basket of
currencies (.DXY: ). The greenback and the S&P 500 have
established a close inverse correlation in recent weeks. Their
30-day correlation stands at -0.84, with -1 being a perfect
inverse correlation.

In earnings news, MasterCard Inc (MA.N: ) jumped nearly 3
percent to $246.08 after the world’s No. 2 credit- and
debit-processing network said quarterly profit rose 15 percent.
[ID:nN02200808]

The CBOE Volatility Index, or VIX (.VIX: ), Wall Street’s
favorite barometer of investors’ fear, slid 1.8 percent after
six days of gains. But analysts expect to see swings into the
close when rumors of exit poll results start to hit the
market.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

US STOCKS-Wall St rallies on vote but warning about gridlock