Associated Press

NEW YORK — The nation might not know who its next president will be, but for Wall Street, at least some of the uncertainty surrounding Election Day is over. With continued Republican majorities in the House and Senate, investors expect little change in the way the government operates during the next four years, no matter who’s in the White House.

"We’re setting things up for a nice year-end rally," said Arthur Hogan, chief market analyst at Jefferies &amp Co. "There’s such a razor-thin Republican majority that whoever wins is going to have a great deal of difficulty moving forward with much of their agenda. That gridlock is something Wall Street likes to see."

But that’s not to say the stock market’s volatility is over. Stocks fluctuated Wednesday after election officials said it would be at least another day before they know the winner of Florida’s electoral votes, which will then determine the next president of the United States.

Health care stocks rallied on expectations that the industry would be subject to few new laws or regulations in the next few years because of the makeup of Congress. But technology issues tumbled on concerns that some of the sector’s highest-priced issues won’t deliver earnings to justify their high value in a moderating economy.

Analysts said investors were still reluctant to make any big moves until the election outcome is known. A remaining source of uncertainty is the next president’s appointments, particularly at the Federal Reserve and the departments of Justice and Energy.

Fed Chairman Alan Greenspan’s term doesn’t expire until June 2004, but the new president will have to fill three vacancies on the Federal Reserve Board in the meantime.

At Justice, the incoming attorney general will inherit the Clinton administration’s case against Microsoft. A federal judge ruled in June that the software maker should be broken up because of antitrust violations, and how aggressively the government pursues the case will depend on the new president’s appointments.

Another issue for the new administration is whether oil companies will be allowed to drill in the protected Arctic National Wildlife Refuge in Alaska.

Regardless of those unanswered questions, many on Wall Street believe the markets may have gotten the best news possible: a Congress too deadlocked to spend money or to pass new laws that change the way businesses operate.

"I would argue that one of the reasons the last eight years have been so successful for the economy has been because of the gridlock," said Hogan, the Jefferies analyst. "That means there may be more to come."

Analysts also said the fact that the voting is over does take some pressure off the markets, particularly where interest rates are concerned.

The Fed has raised rates six times since the summer of 1999 to slow economic growth to more sustainable levels and restrain inflation. In recent weeks, the economy has shown increasing signs of moderating, but many analysts believe the Fed refrained from changing its current bias toward increasing rates for fear of influencing voters.

With the voting over, many now expect the Fed to declare that inflation is less of a risk to the economy when it meets next Wednesday. That could be the first step toward a future interest rate cut — a move Wall Street would certainly welcome.

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