Stocks mixed after election

NEW YORK (CNNMoney.com) -- Stocks were mixed Wednesday morning, as traditionally Republican Wall Street weighed the possibility of the Democratic Party controlling both houses of Congress.

The Dow Jones industrial average (down 34.74 to 12,122.03, Charts) lost a few points roughly 80 minutes into the session, after hitting a record trading high in the previous session.

The broader S&P 500 (down 1.92 to 1,380.92, Charts) index and the tech-fueled Nasdaq composite (down 4.13 to 2,371.75, Charts) also lost a few points.

All three major gauges had slumped further at the open, before trimming some losses.

Stocks rallied Monday and Tuesday as investors geared up for Tuesday's Congressional elections, with many on Wall Street expecting the Democrats to take control of the House of Representatives, but for the Republicans to hold on to the Senate by a slim majority.

This would create gridlock and would limit the power of either party to push through legislation perceived as partisan, an environment acceptable to the markets.

Such a scenario may still prove to be the case. However, it was unclear as of Wednesday morning.

While preliminary tallies show that the Democratic Party has taken control of the House for the first time since 1994, control of the Senate remains too close to call, due to undecided races in Virginia and Montana.

The possibility of full Democratic control of Congress may have concerned investors Wednesday morning. Additionally, the risk of a dragged out recount in close races may have also weighed on stocks.

However, stock declines were slim, with the positives that have boosted the market for months remaining in place. They include: strong earnings, the belief that the economy is headed for a so-called "soft landing" and supportive Federal Reserve policy regarding interest rates.

Among early decliners, pharmaceutical and defense stocks were under pressure, reflecting the possibility of a Democratic congress.

Dow losers included Pfizer (down $0.56 to $26.49, Charts), down 1 percent and Merck (down $1.64 to $44.26, Charts), down 3.5 percent. Merck was also under pressure on news that it is facing $5.6 billion in tax liabilities related to accounting for past transactions.

Defense stocks slid on bets that a Democratic congress would cut defense spending. Dow stock Boeing (down $0.60 to $83.95, Charts) fell, along with competitors Lockheed Martin (down $1.09 to $86.40, Charts), Northrop Grumman (down $0.71 to $65.69, Charts) and Raytheon (down $0.80 to $48.88, Charts).

Stem cell research companies rose on bets about the new Congress, including news that Missouri voters approved a measure guaranteeing federally-supported research and treatment in the state. Shares of StemCells (up $0.22 to $3.29, Charts) and Geron (up $0.18 to $8.56, Charts) both climbed.

Oil stocks rose along with the price of the raw commodity, giving the market some strength. The Amex Oil (up 11.58 to 1,162.05, Charts) index added 0.8 percent.

U.S. light crude oil for December delivery rose 67 cents to $59.60 a barrel on the New York Mercantile Exchange after the weekly inventory report showed a smaller-than-expected rise in crude supplies.

Treasury prices rose modestly, lowering the yield on the 10-year note to 4.65 percent from 4.66 percent late Monday. Bond prices and yields move in opposite directions.

COMEX gold fell $3 to $624.70 an ounce.

More on investing

More on the markets

Gearing up for gridlock