"The street is reacting positively to the election results," said David Allen, director of strategy and research of First Coverage in Boston. He said data from 350 brokerage firms show continued strength for financial and energy stocks.
"I think it's absolutely clear," said Curt Bradbury, chief operating officer of Stephens Inc. investment bank. "The business community is saying the Obama administration isn't a safe environment for investment and growth." Bradbury, of Little Rock, Arkansas, said he voted for Rep. John Boozman, who defeated incumbent Blanche Lincoln for her Senate seat. The administration's actions toward businesses have created uncertainty for his clientele of smaller companies, with sales between $50 million to $1 billion, he added.
"The worst case is gridlock -- and frankly, if that stops the direction of the administration, that's good for business. Frankly, I think this is a good morning for American business."
Many on Wall Street, including Bradbury, are hoping the Republicans can induce the Obama administration to moderate its positions on financial regulation and healthcare reform. Although Massachusetts Democrat Barney Frank kept his seat, he will no longer be chairman of the powerful House Financial Services Committee, which has imposed new rules on banks and financial firms. Republicans will take over the committee chairmanship in January.
Bradbury also hopes Congress will push to extend the Bush tax cuts to create "higher-impact dollars" invested in the stock and bond markets, rather than more spending by the government. The tax cuts, which have the greatest impact on the wealthiest Americans, will expire at the end of the year unless Congress and President Obama agree to an extension.