Stocks close lower on concerns for election uncertainty

By AMY BALDWIN

Associated Press

NEW YORK — Stocks fell sharply today as Wall Street again wrangled with concerns about corporate earnings and the slowing economy. The persisting deadlock in the presidential election only added to the market’s own stalemate.

Investors trade on their increasing fears that a slowing economy and the possibility of higher interest rates would further crimp company profits, particularly those of high-tech firms. The Florida Supreme Court’s ruling late Tuesday that election ballots being recounted by hand should be included in the state’s overall tally also contributed to selling.

The Nasdaq composite index tumbled 116.11 to 2,755.34. The last time the Nasdaq closed lower was Oct. 19, 1999 when it finished at 2,688.18.

The Dow Jones industrial average fell 95.18 to close at 10,399.32, and the broader Standard &amp Poor’s 500 index fell 24.99 to 1,322.36.

After more than two months of negative earnings news and a series of selloffs, Wall Street seemed ready to break for Thanksgiving, and volume was light as many traders left early for the holiday. But they still sold off the already depressed technology sector.

Intuit dropped $4.31 to close at $43.88 after ABN Amro analysts downgraded their rating for the maker of tax software. Intuit predicted it would have lower than expected sales in its second quarter. It also said it lost less money in its first quarter than analysts forecast.

Network equipment maker Nortel fell 52 cents to $37.73 despite saying Tuesday its sales will grow about 40 percent in the fourth quarter.

"There is increasing evidence building that we are seeing a slowdown in demand for PCs, cell phones and other electronic devices," said Alan Skrainka, chief market strategist for Edward Jones of St. Louis. "Stocks that were priced for perfection are coming down sharply because we have less than a perfect environment."

Investors have been dumping pricey technology issues ever since companies began warning that earnings and sales would slump. With the lack of resolution in the election, investors are sticking to that strategy.

The market’s few recent rallies have been brief and brought on spurts of bargain hunting.

"In the short run, emotions drive the stock market and right now fear has the upper hand," Skrainka said. "Politics are a factor, but they aren’t the key reason stocks are dropping … The main concern is the slowdown of the economy and the slowdown on corporate earnings and problems in the technology sector."

But some analysts believe the election was a significant factor in Wednesday’s trading.

"Today’s market is absolutely politically related," said Barry Hyman, chief investment strategist for Weatherly Securities.

He reasoned that earnings outlooks were no worse Wednesday than they have been in recent sessions. And, he noted that tobacco companies have fallen when Vice President Al Gore seemed to gain ground in the dispute, and that drug stocks benefited from news that seemed to favor Texas Gov. George W. Bush.

Looking at those sectors Wednesday, it appeared to be a draw. Drug maker Merck lost $1.31, finishing Wednesday at $90.69. Cigarette maker Philip Morris slipped $2.43 to $35.

Other stocks moved on non-political events.

Coca-Cola, which announced late Tuesday night it won’t buy Quaker Oats, rose $4.38 to $59.63. Quaker stumbled $7.44 to $87.

Airline stocks traded lower while travelers set off to celebrate Thanksgiving. Northwest was off 19 cents at $24.19, and United Airlines fell $1.38 to $36.13. Both airlines face possible flight delays because of disgruntled mechanics.

Wall Street had new evidence Wednesday that the economy is slowing. The Labor Department said the number of Americans who filed new claims for unemployment benefits rose 7,000 to a seasonally adjusted 336,000 for the week ending Nov. 18.

The Russell 2000 index, which tracks smaller companies, fell 8.89 to 457.90.

Declining issues outnumbered advancers nearly 2 to 1 on the New York Stock Exchange where volume was 960.35 million shares, well below Tuesday’s 1.11 billion.

Overseas markets also closed lower. Japan’s Nikkei stock average fell 0.7 percent, and Germany’s DAX index dropped 2.5 percent. Britain’s FT-SE 100 lost 2.5 percent, and France’s CAC-40 fell 2.2 percent.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.