WASHINGTON

-- The recent run-up in stock prices at the same time that President Clinton's health care bill died in Congress may be more than just a coincidence.

Linking the performance of financial markets with presidential politics is always a dubious business, but some analysts believe investors are now taking comfort from the flaming crash of Clinton's most ambitious domestic policy agenda.

Some also say that stocks, and perhaps bonds, will do better in the last two years of Clinton's term as the expansion continues at a more subdued pace.

Robert S. Robbins, chief market strategist for the Robinson-Humphrey Co. in Atlanta, says he has set aside some of his worries about the stock market and believes the Dow Jones industrial average can reach a new all-time high of 4,200.

"I think the path of least resistance is up now," Robbins says. "It's tricky in an aging bull market, but for now it looks like we' ve shaken off the fears that caused that correction earlier this year and gotten close enough to a noninflationary growth rate that we don't need substantially higher interest rates."

Robbins says investors were cheered when Clinton's health care legislation stalled out because they feared the government was on the verge of enacting a huge new entitlement program that would lock in votes and create a European-style welfare state incapable of creating jobs. These risks have gone by the boards.

Robbins also says financial markets have been encouraged by the prospect that the Republicans will pick up a number of seats in the House and Senate, limiting Clinton's ability to carry out a liberal economic agenda.

Sung Won Sohn, chief economist for Norwest Corp. in Minneapolis, points out that since 1944, stocks have done consistently better in the two years leading up to election time.

In a recent market letter, Sohn writes that "presidents tackle the most difficult parts of their agenda while they still have high popular ratings, usually rattling investors in the process." In Clinton's case, his standing in the polls fell while he has pursued an ambitious agenda for the economy, taxes, and health care.

During the second half of their terms, presidents tend to try to "clean up their image and boost opinion poll ratings" while avoiding controversial political issues, Sohn says. He believes "there is an excellent possibility" that Clinton will propose a middle-class tax cut in 1995 to pump up the economy and win votes.

Early in their administrations, Presidents Kennedy, Johnson, and Nixon all presided over falling stock markets that subsequently revived. President Reagan saw a recession followed by a booming economy and stock market that did not crash until October 1987. But stocks recovered quickly and continued up, pushing the Dow from 2,000 to the this year's January high of 3,977.36.

Robbins says that research he did when he worked on Wall Street showed stocks were pulled up and down over the years as the Federal Reserve gunned the money supply in presidential election years, and then had to mop up with higher rates.

But the current Fed under Alan Greenspan is operating differently this time around. The aim now is to stay out of politics and keep the economy going at a slower but more sustainable pace that supports stocks and bonds.

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