Pre-Market Primer: Stocks Gain as Americans Head to Polls
By Vincent Trivett Nov 06, 2012 8:45 am
How will the markets react?
MINYANVILLE ORIGINAL Stocks are set to rise today as Americans head to the polls to choose their next president.
The last polls show President Barack Obama leading Mitt Romney in the main battleground states. New York Times blogger and statistician Nate Silver gives the president a 91.6% chance of winning.
For the markets, the margin of victory and the balance of power in Congress matters a lot. Jim Reid, a London-based strategist for Deutsche Bank (NYSE:DB) told Bloomberg news, “The worst-case market scenario is likely to be a narrow Obama victory where a bruised Republican party has enough power and frustration to cause large fiscal cliff tensions.” He noted that a Romney victory would be negative for equities in the long run because that would throw the Fed's easing program into question.
Meanwhile, in Europe, Greeks are striking in protest against an important austerity vote in the Parliament. The vote aims to make it easier to hire and fire public sector workers and slash pensions. The next tranche of aid from the troika is contingent on passing these reforms.
German composite PMI fell to 47.7 last month, after a narrower contraction of 49.2 in September. Markit, the organization that made the survey, says that these numbers indicate a GDP contraction in the fourth quarter for both Germany and the eurozone.
Yesterday, Bloomberg reported that Apple (NASDAQ:AAPL) insiders are working to replace Intel (NASDAQ:INTC) processors with a homemade design based on ARM (NASDAQ:ARMH) chip architecture. ARM, based in the UK, gained over 2.5% yesterday, and continued to rally in the pre-market while Intel shares lagged. Especially with the stagnation in PC sales and its absence in mobile devices, losing Apple's business could be bad news for Intel. This wouldn't be possible for years, however. Apple would have to catch up to Intel's legendary $10 billion yearly research and development spending. Apple started shipping Mac desktops and laptops with Intel chips in 2006.
AOL (NYSE:AOL) reported earnings per share of $0.22 on revenue of $531.7 million. Ad revenue was up 7% from last year, making this the "best revenue performance in over seven years" for the company. This is AOL's fourth straight earnings beat. Analysts estimated $0.17 per share of earnings from $521 million in sales. The company's stock price has risen 137.15% year-to-date and over 3% in pre-market trading.
No positions in stocks mentioned.
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