With the official unemployment rate still at a stubbornly high 9.6% and the housing market still depressed, it's no wonder voters were unhappy and turned out in droves to express their displeasure at the ballot box. Recent polls from CNN, Gallup, Pew, Rasmussen -- pick a pollster, any pollster -- show the economy as the top issue for voters, so last night's election results weren't too surprising.
The tally
As widely expected, the Republicans won control of the House of Representatives, while the Democrats escaped election night with a razor-slim majority in the Senate. According to Wednesday morning reports from TheWall Street Journal, the GOP gained about 60 House seats and at least five Senate seats, with a few races still too close to call.
Enough about the political winners and losers in this year's election. What about your portfolio? Which stocks stand to benefit from this shuffling of the Congressional cards?
Who is smiling today?
Companies in the health insurance, oil, coal, and pharmaceutical industries are likely to be on the list of winners, according to CNBC's chief Washington correspondent, John Harwood. In a recent interview with The Motley Fool's Chris Hill, he listed these industries as beneficiaries of a Republican win in the midterm elections.
Climate change legislation is unlikely to re-emerge in a Republican-controlled House. More importantly, with Republicans assuming the leadership of House committees, they will have the power to initiate investigations of agencies such as the Environmental Protection Agency to delay or block carbon-emissions-related rules and regulations, and as a result boost the outlook for oil giants ExxonMobil (NYSE: XOM ) and Chevron, as well as coal companies such as Peabody Energy. A recent report from the Los Angeles Times indicates that is what the Republicans plan to do. In addition, spending bills originate in the House of Representatives, so the power of the purse is another route to reining in the ability of the EPA -- and other agencies -- to issue or enforce regulations.
In the health-care arena, WellPoint and UnitedHealth (NYSE: UNH ) will no doubt welcome the change in political climate. While health-care reform legislation signed into law in March is unlikely to be repealed during the Obama administration's tenure, many of the details dictating the day to day rules were left open for the Department of Health and Human Services to determine. As with the EPA's climate change rules, HHS may face challenges from House Republicans as it begins to work toward putting the specifics in place.
Other winners
Motley Fool Income Investor advisor James Early sees big Wall Street firms Citigroup (NYSE: C ) , JP Morgan, and Goldman Sachs benefiting from a Republican win in the midterm elections. Similar to health-care-reform legislation, the devil is in the details with financial reform. Congress left a lot of the details up to financial regulators like the Securities and Exchange Commission and Commodity Futures Trading Commission, and much of the legislation doesn't kick in for years. He also sees infrastructure stocks -- Fluor (NYSE: FLR ) , Cemex (NYSE: CX ) , and URS -- as surprise winners, if another stimulus is required to keep the economy on track, but additional stimulus seems like a tough sell in the current climate.
Any losers?
While less clear-cut, alternative energy companies are likely losers. If oil and coal are election winners, the future is dimmer for companies that benefit when using oil- and coal-based energy are costlier. For instance, both First Solar (Nasdaq: FSLR ) and A123 Systems (Nasdaq: AONE ) list government tax breaks and other subsidies as important to their business, and those government programs could dry up as a result of the election.
A surprise loser may be Wal-Mart. According to a Washington Post report, the company's support of health-care reform angered key Republicans, so the company's political influence may be weaker than in past years.
Will a Republican-controlled House help or hurt your favorite stock, or is the government's impact on stocks overrated? Let us know what you think in the comments section. And for more on the election and Congress' impact on the market, check out:
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