Posted By: Tom Hustler

By TIM PARADIS, AP Business WriterWed Nov 8, 2:36 PM ET

NEW YORK - Stocks turned positive Wednesday as Wall Street grew more confident that a huge victory by Democrats in congressional elections would result in gridlock and keep lawmakers on the sidelines out of the way of business interests.
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Investors had largely expected Democrats to win control of the House of Representatives for the first time in a dozen years, but an undecided Senate race in Virginia had earlier unnerved investors who dislike that type of uncertainty. Stocks were little moved by the surprise resignation of Defense Secretary Donald H. Rumsfeld.

"I would think over the next several weeks that investors should return their focus to the likelihood for interest rate moves in the decelerating economic climate, the moderating earnings growth and the weakening housing market," said Elizabeth Weymouth, global investment specialist at JPMorgan Private Bank.

In midafternoon trading, the Dow Jones industrial average was up 21.14, or 0.17 percent, at 12,177.91. If the Dow held its gains, that would give it a new closing high.

Broader stock indicators rose. The Standard & Poor's 500 index was up 3.94, or 0.28 percent, at 1,386.78, and the Nasdaq composite index rose 15.99, or 0.67 percent, to 2,391.87.

Bonds rose, with the yield on the benchmark 10-year Treasury falling to 4.65 percent from 4.66 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 27 cents to $59.20 on the New York Mercantile Exchange after the Energy Department reported that domestic crude inventories rose last week but that gasoline stores fell.DCP-US,USD,NORM

Stocks in sectors as disparate as housing and stem-cell research showed movement Wednesday as investors tried to determine how government might weigh in with regulations or business-friendly measures.

Defense stocks moved little following the news of the Defense Secretary's resignation. Northrop Grumman Corp. was down $1.04 at $65.36, while Lockheed Martin Corp. was down $1.21, or 2.1 percent, at $86.28.

Companies in the stem-cell sector showed gains after voters in Missouri narrowly approved a referendum guaranteeing federally approved stem-cell research and treatment will be available in the state. StemCells Inc. rose 39 cents, or 12.7 percent, to $3.46, while Geron Corp. rose 36 cents, or 4.3 percent, to $8.74. Aastrom Biosciences Inc. was up 15 cents, or 10 percent, at $1.64.

Also, companies in the government-sponsored mortgage business made advances on the notion that Democrats would push plans to broaden access to housing. Fannie Mae was up $1.92, or 3.2 percent, at $61.82, while Freddie Mac was up $1.82, or 2.6 percent, at $71.68.

In other corporate news, Merck & Co. fell $1.95, or 4.3 percent, to $43.95 after the pharmaceutical company said liabilities from tax disputes in the U.S. and Canada could total $5.58 billion.

Cablevision Systems Corp. was up 6 cents at $27.99 after the cable TV operator and owner of properties such as Madison Square Garden, reported a wider-than-expected third-quarter loss.

Sirius Satellite Radio Inc. was up 3 cents at $4.12 after posting a narrower-than-expected loss as revenue more than doubled.

Federated Department Stores Inc., parent of Macy's and Bloomingdale's, reported that it swung to a third-quarter loss from a profit due to costs related to its acquisition of May Department Stores Co. last year; the old May stores were recently converted to Macy's branches. Federated was down 29 cents at $40.05.

Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange, where volume came to 1.09 billion shares compared with 1.06 billion traded at the same point Tuesday.

The Russell 2000 index of smaller companies was up 6.81, or 0.89 percent, at 771.20.

Overseas, Japan's Nikkei stock average closed down 1.08 percent. Britain's FTSE 100 closed down 0.08 percent, Germany's DAX index was down 0.20 percent, and France's CAC-40 was down 0.01 percent.

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