Stock Futures Decline as Obama Defeats Romney for President

U.S. stock futures fell, following a two-day advance for the Standard & Poor’s 500 Index, as President Barack Obama won re-election.

S&P 500 futures expiring in December dropped 0.6 percent to 1,417.2 at 1:26 p.m. Tokyo time. The benchmark index rallied 1 percent over the previous two sessions. Dow Jones Industrial Average futures lost 52 points, or 0.4 percent, to 13,149.

“While the elections will determine who will be doing the negotiating, we’ll still have issues such as the fiscal cliff to deal with.,” said Stephen Wood, the New York-based chief market strategist for North America for Russell Investments, which oversees $152 billion.

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U.S. voters had to decide between giving President Obama another four years or replacing him with Republican challenger Mitt Romney. Television projections showed Obama winning the electoral votes needed to secure a second term in the White House.

President Obama need to address a so-called fiscal cliff of more than $600 billion in tax increases and spending cuts that take effect in 2013 unless Congress can reach a budget compromise.

The options market is implying about a 2 percent move up or down in the S&P 500 over the next four trading days, according to Susquehanna Financial Group LLLP’s head of derivatives strategy Trevor Mottl. That’s equivalent to an even-odds range of 1,389 to 1,445 for the close on Nov. 9 based on options prices as of Nov. 5, he wrote in a note to clients.

Day After

While the S&P 500 has risen an average 0.9 percent on presidential election days since 1984, the index had positive returns in only two of seven times on the following day, according to data compiled by Bespoke Investment Group. On average, the S&P 500 has declined 0.9 percent on the day after the polls, the data showed.

Stocks have on average rallied 3 percent in the two months following Election Day after a tight race, according to Thomas J. Lee, the chief U.S. equity strategist at JPMorgan Chase & Co., who cited historical data from the last five elections with close contests. The equity market gains even more if the challenger wins, he said.

The S&P 500 climbed 15 percent from a June low to a four- year high on Sept. 14 as central banks around the world stepped up stimulus to boost the economy. The benchmark gauge for American equities has surged 14 percent this year.

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