Political uncertainty chips away at stocks

Major stock gauges inch lower as investors consider undecided Senate control, possibility of full Dem. control of congress.

November 8 2006: 10:01 AM EST

NEW YORK (CNNMoney.com) -- Stocks slipped a bit Wednesday morning, as traditionally Republican Wall Street considered the possibility of the Democratic Party controlling both houses of Congress.

The Dow Jones industrial average (down 43.14 to 12,113.63, Charts) lost a few points in the early going, after hitting a record trading high in the previous session.

The broader S&P 500 (down 2.74 to 1,380.10, Charts) index lost 0.2 percent and the tech-fueled Nasdaq composite (down 7.32 to 2,368.56, Charts) lost 0.3 percent.

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

CNN: America Votes 2006

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, 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.

U.S. light crude oil for December delivery rose 34 cents to $59.27 a barrel in electronic trading.

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 $3.20 to $624.50 an ounce.