* Republicans poised to win House control, gain in Senate
* Energy stocks among the day's gainers
* Fed's Wednesday decision eyed, expectations high
* Dow up 0.6 pct, S&P up 0.8 pct, Nasdaq up 1.1 pct
* For up-to-the-minute market news see []
(Adds volume in paragraph 14, details on healthcare stocks
in paragraph six and the VIX)
By Ryan Vlastelica
NEW YORK, Nov 2 (Reuters) - U.S. stocks closed higher on
Tuesday on the expectation the midterm election and a Federal
Reserve decision would create a more business-friendly
environment, though many traders forecast a selloff in the days
ahead.
The S&P 500 index has risen almost 14 percent since
September on speculation of Republican congressional gains and
new measures by the Federal Reserve to stimulate the economy.
"The market is expecting Republicans to at least take one
House, and that's a a big reason why we traded up over the past
few months," said Scott Wren, senior equity strategist at Wells
Fargo Advisors in St. Louis.
"There's a high probability that we'll see a modest
pullback afterward as the euphoria fades."
Most polls show Republicans regaining control of the House
of Representatives, while President Barack Obama's Democrats
could be left with a narrow majority in the Senate. For
details, see [] and []
A divided Congress is typically seen as bullish for stocks
as it makes passing new laws harder and lessens uncertainty for
business. Healthcare stocks, which were under pressure before
the healthcare bill became law in March, climbed in Tuesday's
session. The Morgan Stanley Healthcare Payor index <.HMO> was
up 2.7 percent. Cigna Corp <CI.N> advanced 4.2 percent to
$36.85.
Some of the healthcare law's critics hope Republicans can
spearhead attempts to repeal or not fund parts of the law.
Energy stocks were the second best performer among the 10
S&P sectors, rising 1.1 percent. Republicans, traditional
supporters of the oil industry, are viewed as less likely to
pursue regulations that would hurt profits. A rise of 1.1
percent in oil prices on Tuesday also helped the sector.
The Dow Jones industrial average <> was up 64.10
points, or 0.58 percent, at 11,188.72. The Standard & Poor's
500 Index <.SPX> was up 9.19 points, or 0.78 percent, at
1,193.57. The Nasdaq Composite Index <> was up 28.68
points, or 1.14 percent, at 2,533.52.
In what could be another positive catalyst for stocks, the
Fed is expected to announce a program of asset purchases of at
least $500 billion via quantitative easing -- in effect
printing money to buy bonds and lower borrowing costs. A
statement is expected on Wednesday after a two-day meeting by
the U.S. central bank. For a special report, see
http://link.reuters.com/pyb23q
"I'd sell the market strength into this election result and
tomorrow's quantitative easing," said Doug Kass, president at
Seabreeze Partners in Palm Beach, Florida.
The U.S. dollar fell 0.7 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 2.9 percent
to $245.98 after it reported a third-quarter profit that beat
expectations, but Kellogg Co <K.N> fell 2.2 percent to $49.63
after it forecast weaker-than-expected earnings growth in 2011.
[] and []
The CBOE Volatility Index <.VIX>, Wall Street's favorite
barometer of investors' fear, slid 1.2 percent after six days
of gains.
Volume was light, with about 6.92 billion shares traded on
the New York Stock Exchange, the American Stock Exchange and
Nasdaq, below the year-to-date daily average of 8.73 billion.
"The market appears to be drifting into wait-and-see mode,
as investors wait for greater clarity about the future for the
nation's government and economic policies," said Frederic
Ruffy, options strategist at WhatsTrading.com in New York.
Volume was light, with about 6.92 billion shares traded on
the New York Stock Exchange, the American Stock Exchange and
Nasdaq, below the year-to-date daily average of 8.73 billion.
About three stocks rose for every one that fell on the New
York Stock Exchange, while on the Nasdaq, more than two stocks
rose for every one that fell.
(Additional reporting by Rodrigo Campos and Doris Frankel;
Editing by Kenneth Barry)
