What happens Wednesday in the stock market if the election is over and nobody wins?

Like many others, Brett Gallagher, head of U.S. equities at Julius Baer Investments in New York, said it’s “extremely likely” the nation is headed for a repeat of 2000 – or worse – with the possibility of no clear-cut winner, and recounts and litigation leaving the outcome in doubt for days, if not weeks.

For equities, said former Merrill Lynch chief economist Donald Straszheim, who now has an advisory firm in California, “it’s a minus. How big a minus, I don’t know, but to have Washington in turmoil and bitterness is not a good thing.”

But Greg Valliere, chief political strategist at Charles Schwab’s Washington Research Group, said the market prepared in October for that result.

“My sense was there was a stretch … where the equity market was so choppy that it was being factored in,” he said.

A bigger concern, he said, would be overseas investors selling off the dollar.

“Global investors could get cold feet,” he said. “To me, that’s a bigger risk.”

Historically, an election is rarely a big one-day event for stocks: In 14 post-World War II elections, the Dow Jones industrial average has moved more than 1 percent just three times.

Although the Dow has fallen the day after an election nearly twice as often as it advanced, some analysts said there’s the potential this time for a relief rally if there’s a clear winner.

Until the outcome is resolved, Lehman Brothers global chief economist John Llewellyn said, he expects “a modest flight to safety” in stocks.

Under the theory that there has to be a winner eventually, some sectors may benefit from each possible outcome.

One focus of analysts has been health care. Valliere and others said Democratic challenger Sen. John Kerry is likely to put pressure on big pharmaceutical firms through efforts to reimport drugs from Canada and otherwise hold the line on drug prices. Generic drug manufacturers could benefit, he said.

Analysts at Standard & Poor’s see a victory by President Bush as positive for hospitals and managed-care firms, in part through potential caps on malpractice damages and efforts to encourage Medicare recipients to join health maintenance organizations.

The prospect of tort reform also could boost property and casualty insurers, S&P says.

On the energy front, Valliere sees a Kerry victory as a problem for coal-dependent utilities because tougher emissions standards are likely, while S&P sees the prospect of higher fuel-efficiency rules as perhaps hurting auto stocks.

S&P analysts said a Bush victory helps oil and gas producers, drillers and service firms, while a Kerry win would be a positive for alternative-energy stocks.

Valliere said a Kerry victory could increase antitrust scrutiny of mergers and acquisitions, which could severely crimp media consolidation.

Analysts at S&P said a Bush victory would likely benefit defense stocks temporarily, while a Kerry win could send them lower by 10 percent to 15 percent. Valliere, however, sees it primarily as a “psychological negative.”

“I’m not sure that’s a real threat because I can’t see a conservative House going along with deep defense cuts,” he said.

Many see a Kerry presidency as beneficial for bonds, given his pledge to cut the deficit. Valliere, however, is not convinced Congress would enact deep spending cuts or tax hikes.

“There’s no way in the world that Kerry would be able to undo the Bush tax cuts,” he said.

But if Kerry succeeds, Gallagher said, it might spark some selling to lock in lower capital-gains rates and unloading of high-yield stocks because favorable dividend tax rules could disappear.

“You might see some pressure on the big, liquid widow-and-orphan stocks that people have traditionally bought and held,” he said.

Utility stocks are one example that would fit into that category.

The idea of gridlock in Washington – with Kerry facing a Republican Congress or Bush unable to clear his initiatives in a closely divided Senate – has many analysts’ attention.

“I think the markets would be perfectly content with gridlock,” Valliere said. “It means they do less harm.”

But he and others are not convinced it’s beneficial in the current climate, because of issues like Social Security and the deficit that cry out for attention.

“I think there are serious issues Washington needs to address, and they won’t get addressed,” Straszheim said. “The government is utterly overcommitted on entitlements, and it’s not going to be fixed any time soon.”

S&P chief economist David Wyss said the deficit is a critical issue, but “I think either one is going to have a hard time doing much about the deficit because they’re going to be dealing with a Congress that isn’t going to want to raise taxes and isn’t going to want to cut spending.”

Gallagher and other analysts say a president often has little effect on particular stocks.

“It doesn’t matter if it’s Bush or Kerry in the White House,” he said. “What really drives things are corporate earnings.”

Although he sees potential for short-term moves in the market, speculation about winners and losers can be overdone.

“I would tend to steer away from making my portfolio bets by trying to pick favorites in terms of sectors,” he said. “I would tend to be in the camp that says there’s a lot of talk about it … but at the end of the day, there’s not going to be a lot of difference.”

Sam Stovall, S&P’s chief investment strategist, said the market recognizes that.

“I think the equity markets are really focusing on the three Es, in descending order: energy, earnings and the election,” he said. “I still believe that it’s in third place.

“It certainly is a good headline event, it’s something people can talk about on a daily basis – even more than it’s deserved.”