The Nasdaq composite index closed down 116.11, or 4 percent, at 2,755.34, and the Standard & Poor's 500 index fell 24.99, or almost 2 percent, to 1,322.36. The Dow Jones industrial average lost 95.18 to 10,399.32.
About three stocks fell for every one that advanced on the Nasdaq, which generated a volume of 1.88 billion shares and closed below 2,800 for the first time since October 1999.
Volume on the New York Stock Exchange stayed on the moderate side at 960 million shares, as two stocks fell for every one that climbed.
Florida's Supreme Court said late Tuesday that ballots recounted by hand from three predominantly Democratic counties must be added to the state's total. The decision pushes back any resolution of the presidential election at least until next week.
"Stocks go down for fundamental reasons, but at the same time people are emotional and reactive," said Brian Belski, a market strategist at U.S. Bancorp Piper Jaffray.
Belski added that many investors are plowing their cash into money market mutual funds and waiting for the current storm to blow over.
Despite the near-term doubts, most market watchers agree that the markets will rally somewhat after political uncertainties are put to rest. The upswing may be short-lived, however, depending on companies' upcoming fourth-quarter earnings performances.
Market watchers have slashed their fourth-quarter corporate earnings estimates for companies in the S&P 500, according to First Call/Thomson Financial. As of Wednesday, analysts expected companies to report earnings growth of 10.7 percent in the fourth quarter from the same quarter last year. About six weeks ago, on Oct. 1, analysts expected earnings to increase 15.6 percent.
Growth for the first quarter of 2001 has also been revised downward to 11 percent from 14.2 percent since Oct. 1.
In the third quarter of 2000, earnings grew 18.3 percent from the same quarter last year.
"In both cases, that's far more than a normal trimming," said Chuck Hill, director of research at First Call. He said earnings growth usually comes down about 1 percent during the same six-week time frame.
Technology companies have received a more severe earnings shredding. The 81 tech companies in the S&P 500 pumped up their earnings by 42 percent in the third quarter. Analysts now expect the S&P tech sector to report earnings growth of 16 percent for both the fourth and first quarters. On Oct. 1, Wall Street pegged tech earnings growth at 29 percent and 28 percent for the same quarters.
The slumping tech sector, which has driven the U.S. economy through much of the 1990s, might spill over into the broader economy.
"If we get further (earnings) cuts in tech, then the chances for a soft (economic) landing are gone," Hill said.
Still, the concern over earnings growth might be short-sighted. Hill said the historical quarterly earnings growth rate for the S&P 500 is about 7 percent, making the current forecasts attractive by comparison.
Still, earnings news hit some technology stocks on Wednesday. Intuit fell $4.31, or nearly 9 percent, to $43.88. The maker of personal finance software reported fiscal first-quarter earnings after markets closed Tuesday that beat Wall Street expectations.
The company also gave reduced sales forecasts for the second quarter. Intuit said more customers will choose to buy its software over the Web than through stores, which will push the bulk of its sales closer to the tax-filing deadline in the United States.
Software maker Novell fell $1.44, or 19 percent, to $6 and set a new 52-week low of $5.81, compared with the stock's high of $44.56.
The company reported a fiscal fourth-quarter operating profit of $940,000, or break-even per share, compared with a net income of $73.8 million, or 21 cents a share, last year. The results met the consensus estimate of four analysts polled by First Call/Thomson Financial.
All of the 18 sectors tracked by CNET Investor fell into the red. Server software makers and Internet services companies posted the sharpest drops, falling about 7 percent each.
Portal Software helped drag down the server software group. The company fell about 64 percent, hitting a new 52-week low of $6.19, making it the largest percentage loser on the Nasdaq. Volume exceeded 43 million shares, more than 18 times the stock's average daily volume of 2.4 million shares.
Goldman Sachs analyst Rick Sherlund downgraded the stock to "market outperform" from "recommended list." Many other analysts also issued negative reports on the software maker.
The company, which makes customer management and billing software for providers of Internet-based services, reported third-quarter earnings of 3 cents a share, beating analysts' expectations of 2 cents as surveyed by First Call.
However, revenue growth slowed significantly from the second to the third quarter. Sequential revenue growth was only 12 percent compared with 28 percent revenue growth from the first to the second quarter.
North American software sequential sales growth also slowed to 2 percent this quarter vs. 5 percent last quarter and accounted for 57 percent of total sales in the third quarter and 63 percent in the second.
Merrill Lynch analyst Mark Fernandes lowered his intermediate-term rating on Portal from a "buy" to "accumulate" because of "concerns about slow license revenue growth in North America," he wrote in a report.
"While we remain extremely positive about Portal's dominant competitive position and the need for IP billing, we are more cautious about the demand outlook from the smaller cash-strapped service providers," he wrote.
Other software companies headed lower. PeopleSoft fell $2.94 to $36.06, and Inktomi dropped $7.88, or about 22 percent, to $28.38. Inktomi shares traded as low as $27.25, a new 52-week low, compared with the stock's high of $241.50 over the same 52-week period.