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Factbox: Elections' impact on companies
WASHINGTON (Reuters) - The midterm elections Tuesday are widely expected to result in a split Congress, with the Republicans controlling the House of Representatives and the Democrats maintaining a narrowed lead in the Senate.
The likely result could be increased gridlock, as each chamber could block bills passed by the other while Democratic President Barack Obama wields veto power over any legislation that manages to pass both houses.
But a Republican majority in the House could have considerable power over spending, as the Constitution specifies that all bills for raising revenue must originate there.
Here are some companies that could be winners or losers if the election turns out as predicted:
In the event of a major Republican sweep, Congress could back away from efforts to further regulate the chemicals used by energy companies to extract gas from natural gas shale properties.
The industry was relieved earlier this year when a measure to beef up regulations fell apart, but worries about poisoning groundwater have kept the issue at the forefront.
Besides Exxon Mobil Corp, which joined the shale boom with its $27 billion purchase of XTO Energy, companies such as Chesapeake Energy Corp, Southwestern Energy Co and Range Resources Corp could benefit from Republican gains.
Attempts to regulate carbon emissions, such as the already moribund "cap and trade" proposals, could receive a death sentence at the hands of a split Congress. That would effectively leave the question of emission rules in the hands of the Environmental Protection Agency.
Utilities that rely on coal, such as Duke Energy Corp, American Electric Power Co Inc and Southern Company, will almost certainly find these rules more expensive than the measures Congress had been considering, according to Duke CEO James Rogers.
Health insurers' stocks are poised to rise on Republican gains, even if a full repeal of healthcare reform is unlikely. Analysts have said shares of companies like UnitedHealth Group Inc, WellPoint Inc and Aetna Inc could rise 5 percent to 15 percent within a month or two after the elections, depending on the Republicans' success.
However, some investors could unload shares immediately after the election to take profits and capitalize on a recent rise in the stocks.
Pharmaceutical stocks such as Pfizer Inc and Merck & Co Inc may also rally should Republicans make gains. Democrats have been seen as hostile to the industry's fortunes, so their defeat could lead to improving investor sentiment.
Congress passed legislation in July, over virtually unanimous Republican opposition, to overhaul the financial system and set new rules for Wall Street. At the time, credit rating agencies such as Moody's Corp, Standard & Poor's and Fitch Ratings were seen as subject to greater liability, while large financial firms like Bank of America and Goldman Sachs were to be prohibited from proprietary trading.
Any attempt by Republicans to roll back financial regulation would face a veto by President Obama. At most they might be able to modify parts of the bill, but it is not clear at this stage what they would be able to pass.
A good showing by the Republicans could reduce scrutiny of the for-profit education sector, including companies such as Apollo Group, DeVry and ITT Educational Services.
Obama's Education Department has accused the sector of failing to educate students and leaving them heavily in debt. Republican opponents argue that defaults on student loans and high dropout rates were common at all schools, not just for-profits.
But Republican gains could also crimp the companies' budgets if the party uses its new clout to cut education spending.
Wal-Mart Stores Inc, the world's largest retailer, could breathe easier as a Republican majority in the House would probably put the final nail in the coffin of "card check" legislation, which could have made it easier for workers to join unions.
THE STOCK MARKET
While investors are expecting a split legislature, an unexpectedly strong showing by either Democrats or Republicans could spark a big move in stocks.
The widely expected outcome -- that Republicans gain control of the House but not the Senate -- is considered priced into the markets already.
But if Republicans take control of both chambers, equities could gain in the near term on hopes for further policy gridlock. If Democrats perform better than expected and retain control of both houses, stocks are expected to sell off on the potential for further regulation.
(Reporting by Matt Daily, Lewis Krauskopf, Susan Heavey, Rachelle Younglai, A.Ananthalakshmi, Brad Dorfman and Ryan Vlastelica; Editing by Derek Caney)
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