Election anxiety drags markets down

Stocks slide across the board as a recount in Florida mires the nation in political uncertainty.

4 min read
Stocks slid across the board Thursday as a recount in Florida mires the nation in political uncertainty.

The Nasdaq composite Want election news? Get it hereindex fell 31.35 to 3,200.35, and the Standard & Poor's 500 index declined 9.14 to 1,400.14.

The Dow Jones industrial average fell 72.81 to 10,834.25.

The Nasdaq generated a respectable volume of more than 1.91 billion shares, and two stocks declined for every one that advanced. Volume on the New York Stock Exchange surpassed 1.10 billion shares with 17 stocks losing for every 11 that rose.

Just before 11 a.m. PST, The Dow fell nearly 300 points to its low of 10,618.49 for the day. At the same time in the trading session, the Nasdaq fell as much as 144 points to the day's low of 3,087.06.

"The uncertainty...has an effect on the market, there's no doubt about that," said Kathy Taylor, vice president and assistant manager of Nasdaq trading at A.G. Edwards. One reason the Dow dropped so low was because "people were concerned that it would take longer to settle the election."

Todd Clark, head of listed trading at WR Hambrecht, agreed that the cloudy political picture is roiling the markets. "The fear is that the recount will take a long time to be resolved and may wind up in the Florida courts," Clark said.

Negative earnings news also hammered some Internet stocks. Internet Capital Group, which invests in e-commerce start-ups, closed down $5.06, or 31 percent, at $11.19 on a volume of 13.5 million shares, nearly three times the stock's average daily volume of 4.97 million shares.

The company said Wednesday that it will cut 50 jobs, or 35 percent of its work force, and will take a fourth-quarter charge of $25 million to $30 million related to the cuts.

ICG also said its third-quarter loss widened to $263.9 million, or 94 cents per diluted share, compared with a loss of $15.3 million, or 7 cents per share, in the year-earlier period.

Meanwhile, investors received some positive economic news. The Labor Department said the Producer Price Index, a measure of the prices at the wholesale level, climbed by 0.4 percent in October, boosted by a big jump in residential natural gas prices and the largest increase in food costs in six months.

The seasonally adjusted advance in the PPI, a key indicator of inflation pressure, compares with September's 0.9 percent rise, driven mostly by higher oil prices.

Outside the volatile energy and food categories, the "core" rate of inflation at the wholesale level fell by 0.1 percent in October, reflecting sharp declines in the prices of cars and trucks.

Many were bracing for a 0.1 percent increase. In September, the core rate rose 0.3 percent. The numbers indicate that prices are stable.

The CNET tech index fell 28.33 to 2,546.10. Decliners led advancers, with 68 of the 97 stocks in the index falling, 27 rising and two remaining unchanged.

Nearly all of the 18 sectors tracked by CNET Investor slid into the red. Internet content companies posted the sharpest drops, falling about 8 percent, followed by providers of services to Internet companies, which lost 6 percent. The server-software sector was the largest of the day's three gainers, climbing 2 percent.

Disney took a chunk of value out of the Internet content sector and also led the Dow lower. At the end of regular trading, Disney fell $5.75, or nearly 16 percent, to $31.13.

Thomas Staggs, Disney's CFO, said on a conference call with analysts that fiscal first-quarter profit will be about the same as the 25 cents a share that Disney earned during last year's quarter. Wall Street expected the company to make 32 cents a share, excluding losses from its investment in Walt Disney Internet Group, according to the average analyst estimate from First Call/Thomson Financial.

America Online and Time Warner also fell over concern that government regulators would further impede the companies' proposed $127 billion merger. AOL fell $3.62 to $52.68, and Time Warner dropped $4.36 to $78.84.

Internet advertising company 24/7 Media announced layoffs and widened losses. The company reported a loss Wednesday of $22.5 million, or 59 cents per share, compared with an expected loss of 47 cents per share, according to analysts polled by First Call/Thomson Financial. 24/7 Media said it will cut 200 jobs.

Shares of 24/7 fell $1.70, or almost 37 percent, to $2.94.

Engage, the Internet advertising company backed by CMGI, warned it will lose as much as 25 cents per share in its fiscal first quarter. It was expected to lose 20 cents per share, according to analysts polled by First Call. The company also reported that CEO Paul Schaut, 41, will leave the company. Shares of Engage fell $1, or about 29 percent, to $2.47.

CMGI, which owns a majority stake in Engage, lost ground on Engage's negative reports, falling $3.88, or almost 18 percent, to $17.94. CMGI said it will conduct a conference call Monday to review earnings guidance for its fiscal first quarter of 2001, which ended Oct. 31.

Other stocks also fell, as investors awaited earnings news. Dell Computer, which released third-quarter earnings after the markets closed Thursday, fell $1.94 to $28.38 during the trading session.

The direct seller of personal computers earned 25 cents a share for the quarter, matching Wall Street's consensus estimate of 25 cents as surveyed by First Call/Thomson Financial.

IBM, which said in an analysts' conference Wednesday that it faces a shortage of skilled workers, fell 56 cents to $99.44.

Best Buy, a seller of consumer electronics, plunged $20.31, or nearly 39 percent, to $32.06 after warning that its profit for the fiscal third and fourth quarters will fall below analyst expectations because of a slower economy and price cuts. The company said it expects to earn 27 cents per share, compared with analyst estimates of 44 cents per share.