NEW YORK (CNN/Money) -
With his talk about eschewing special interests and fighting "Benedict Arnold CEOs," Democratic front runner John Kerry is not exactly wooing Wall Street.
And why should he? Wall Street is traditionally skewed Republican. Furthermore, as a candidate just in the process of being anointed the Democratic candidate, analysts say Kerry still needs to be careful not to alienate the more liberal wings of his party, just as a Republican in his position would need to be careful not to alienate the more conservative branches of his party.
As Kerry moves more from the left to the center so as to gear up for the national election, his stance may change, analysts say, but for now its not hard to see why a more conservative Wall Streeters might prefer a Republican.
YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own
alert to be notified on topics you're interested in.
Or, visit Popular Alerts
"To the institutional investor, there's a lot at stake this year if Bush doesn't win re-election," said Leslie Alperstein, political economist and president of Washington Analysis, an independent research firm formerly connected to investment bank HSBC. "There are a lot of different issues that make them nervous, but the one that the Democratic candidates have been talking about a lot is the tax cuts."
"Whether you disagree or agree with the size of the tax cuts, with how they were apportioned, it's hard to argue that they haven't had a positive impact on the stock market," he added.
Kerry's talk and the promise of other Democratic candidates to at least partially repeal the $1.3 trillion Bush administration tax cuts have left the institutional investor "freaking out," Alperstein said.
As a result of this, Kerry's popularity on Wall Street hasn't changed much since the start of the Primary season. Some market watchers even connect his rise, and his apparent "electability" versus earlier Democratic front runners, with the stock market's recent six-week slowdown.
The mom and pop factor
But as he's hammered home the point about taking on special interests and restoring jobs in America, Kerry has grown more popular among individual investors -- who are increasingly concerned about the growing deficit, the labor market and health care.
A recent study conducted by International Communications Research and Money magazine showed that investors -- defined as anyone who owns stocks, bonds, mutual funds, a 401(k) or an IRA -- support John Kerry and President George Bush in nearly equal measures.
A separate, recent ABC News/Washington Post Poll showed that 49 percent of those surveyed said they trusted Kerry to do a better job of handling the economy than Bush, while 51 percent said they trusted the Massachusetts Senator to do a better job of creating jobs than Bush.
This doesn't necessarily give Kerry an advantage in the broader election.
"Kerry's focus and his message has really been middle class, middle America, 'I'm standing up for the little guy' and middle class investors respond to that, but that raises the question of how do you go back and talk to the business community after that," said Amy Walter, an analyst with the Cook Political Report, a non-partisan newsletter that tracks election trends.
In addition, the group of people who hold a stock, bond, mutual fund, 401(k) or IRA is so broad, Alperstein said, that it may not be meaningful that investors seem to be equally enamored of both.
Even supposing the suggestion that investors are warming up to Kerry is meaningful, it still may not matter much for the general election, Walter said, considering that the amount of money a campaign raises plays such a big role in a candidate's success or failure and that Bush and the Republican party have raised such vast sums of money.
Among securities and investment industry contributions, donations from political action committees and individuals have been nearly five times as much for George Bush as for John Kerry.
According to recent statistics from the Center for Responsive Politics, Bush has received $5.02 million from the industry, while John Kerry has received $1.07 million.
Stock sectors under different parties
While Wall Street may not be showing support for Kerry through donations, the market is indirectly hinting that it sees Kerry as a viable candidate by the way certain sectors are performing.
For example, aerospace and defense stocks have been sliding since Kerry's emergence in January, with the S&P aerospace & defense index falling more than 3 percent on bets that defense spending will grow at a slower pace should Kerry win.
Merrill Lynch strategists recently took a look at how different sectors have performed under different administrations. Among the findings, the data showed that since 1943, sectors that performed better during Democratic administrations than Republican ones included computer hardware, natural gas and oil. Sectors that did better under Republicans included containers, foods, retail stores, tobacco and truckers.
For a more detailed look at the report, see the chart.