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United States News Title: Markets reflect election results Medical, defense companies decline Markets reflect election results Medical, defense companies decline By Brad Foss The Associated Press WASHINGTON - By handing Democrats control of the House, voters likely set in motion legislative efforts to lower the price of pharmaceuticals and rein in military spending. But with the two parties stalemated in the Senate, where it usually takes 60 votes to pass major legislation, companies such as Merck & Co. and Lockheed Martin Corp. may find themselves beset more by unwelcome rhetoric in Congress than any hurtful changes in law. To be sure, few major changes in corporate America are expected to result from Democrat-led initiatives over the next two years - with the exception, perhaps, of a proposed increase in the minimum wage that may get substantial Republican support. The long-term outlook for companies in the biotechnology and homeland security businesses may benefit, analysts said, from anticipated Democratic efforts to promote stem-cell research and inspect more cargo containers at ports. But the heightened scrutiny of other sectors - including drugs, defense and energy - could cast a shadow that darkens their prospects on Wall Street. "The drug industry is on the top of the list of industries that would be uncomfortable if Democrats are successful in the elections," said Ira Loss, an analyst at Washington Analysis. That's because Rep. Nancy Pelosi, D-Calif., who is slated to become speaker of the House, has promised legislation that would allow the government to negotiate directly with drug companies to purchase medicines for Medicare. The drug industry equates the concept to price controls. Shares of Pfizer Inc. fell 55 cents to $26.55 on the New York Stock Exchange, where Eli Lilly shares declined by about 41 cents to $56.57. Shares of Merck fell $1.55 to $44.35 partly because of Merck's disclosure late Tuesday that liabilities from tax disputes could total $5.58 billion. Pelosi has pledged that Democrats also would move to raise the minimum wage - a policy change that could affect fast-food restaurants, as well as other retailers. Ballot measures that mandate increases in existing state minimum wage laws passed in Arizona, Missouri and Montana, among other states. Alaska voters, meanwhile, helped protect the pockets of Big Oil by shooting down a proposal to increase drillers' taxes by $1 billion a year. Generally speaking, Democrats have said they will differ from Republicans by being tougher watchdogs of corporate wrongdoing and government spending and bigger defenders of consumers and labor unions. "There are not going to be wholesale changes in economic policy" because neither party has an overwhelming majority in either the House or Senate - and this may explain the stock market's recent strength, according to Wachovia Securities economist Mark Vitner. Jay Timmons, senior vice president of policy at the National Association of Manufacturers, said he does not expect the partisanship that defined recent campaigns to last very long. Sure, the Democrats will want to distinguish themselves from the Republicans early on - by shifting the emphasis in energy policy from, say, increasing the supply of oil to reducing the demand for it. But Timmons said pragmatism - and an eye toward the 2008 presidential election - will naturally pull both parties closer to the center. "Nancy Pelosi is very shrewd," Timmons said. "She's going to want to build a majority that lasts more than two years, and the way to do that is to reach out to nontraditional allies."
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