Wednesday's Brew (Nov 8)

Enjoy your fresh morning coffee with our summary of the market outlook for the day and a medley of important information you should find useful. Stock futures are down sharply in early activity, as the market is likely to have difficulty digesting Democratic wins in both the House and Senate. The Senate results appear set to drag out, as two close battles remain unsettled. Wall Street had not counted on Democratic wins in both houses of Congress, but you heard it here yesterday. This is likely the catalyst to take markets another leg lower, though anything short of total control for the Democrats is not enough to influence the administration meaningfully. With the Dems controlling both houses, President Bush will have to make some concessions in order to avoid being a lame duck leader for the rest of his term.

OVERSEAS MARKETS

The NIKKEI dropped over 1%, the Hang Seng fell 0.68% and the S&P/ASX 200 shed 0.59%, as concern for U.S. markets post the potential shift of power toward the Democrats pressured shares globally. In Australia, economists expected and received an interest rate increase, and many markets in Asia were trading at or near record territory heading into the American elections, allowing slack for retracing.

Shares across the U.K. and Europe have followed suit to start the day, as shares of firms with sensitivity to U.S. markets are leading the drive downward. Among early losers today are GlaxoSmithKline Plc, as pharmaceuticals appear especially susceptible to earnings impact should the Dems push for lower prescription drug pricing.

ECONOMIC DATA & NEWS

The U.S. economic calendar is rather muted today. As previously noted, Australia's Reserve Bank impacted Asian stocks as it ended its meeting and issued its decision to raise interest rates.

Back home, SEC Chairman Christopher Cox and other market notables will headline the SIFMA meeting in Florida. The New York Society of Securities Analysts holds its energy conference today as well.

COMMODITY MARKETS

Natural gas leads all commodities, rebounding after a sharp fall yesterday. Nat gas is up approximately 1.68% today. After its sharp rise yesterday, ethanol demand beneficiary, sugar is down about 1.45% today. However, confounding consensus, corn is up roughly 1.28% today. Corn is benefiting specifically from speculation that the government may reduce the nation's crop forecast due to July weather damage.

Crude oil is up fractionally, as traders speculate heating oil supplies declined last week due to the cold spell that swept much of the country. The U.S. Energy Department will announce inventory levels at its regular time today, 10:30 EST. Analysts surveyed by Bloomberg News expect distillate supplies, including heating oil and diesel fuel, likely fell 800,000 barrels last week.

STOCKS NEWS

Reporting earnings Wednesday, look for Cisco Systems Inc., Federated Department Stores, Barr Pharmaceuticals, Dynegy, Hospira, Interpublic Group, PG&E Corp., and BMC Software Inc.

Sirius Satellite Radio (SIRI) posted a narrower than expected third quarter loss, reporting a loss of $0.12, versus analysts' consensus for a $0.14 miss. SIRI's results came on a strong rise in subscriptions, and the company reaffirmed its full-year outlook. SIRI shares were up 3.7% in pre-market trading. Drugmaker, Merck & Co. (MRK), indicated in an SEC filing that it may face $5.58 billion in tax liability related to disputes over accounting for past transactions. Shares of MRK are down 2.5% in early activity.

While big pharma should be pressured by the Democrats' rise to power, there are some firms that may benefit within the health care space. Genetic engineering firms that have suffered from conservative restraint, may rise as that restraint is potentially removed. We hope you enjoyed your "Morning Coffee" and wish you a good day trading. Be sure to read "The Greek's Week Ahead" for your market-moving event planner for the week. (disclosure)