The Nasdaq composite index fell 184.06, or 5 percent, to 3,231.73, and the Standard & Poor's 500 index dipped 22.59, or nearly 2 percent, to 1,409.28.
The Dow Jones industrial average closed down 45.12 at 10,907.06.
About 25 stocks declined for every 13 that advanced on the Nasdaq, which generated a volume of 1.68 billion shares. Volume on the New York Stock Exchange stayed on the light side at 891 million shares as 15 stocks lost ground compared to 13 that gained.
By far the biggest factor pushing the markets down: an undecided presidential election closer than any in at least 124 years. A recount in Florida will decide the presidential race between Texas Gov. George W. Bush and Vice President Al Gore.
"The market hates the uncertainty," said Scott Marcouiller, a vice president and market analyst at A.G. Edwards. The fact "that we don't have a decision has shaken up a lot of people."
Despite the uncertainty, Marcouiller and other analysts view the election results as generally favorable to the financial markets. Given the relatively robust stock market and low unemployment rate, Wall Street is hoping that a legislature evenly packed with Republicans and Democrats will be able to inflict few radical changes in any direction on the economy, regardless of who wins the presidency.
"The number of Republicans and Democrats growing closer together in the House and Senate will effectively serve as gridlock," Marcouiller said.
The markets were flat Tuesday as investors waited for election results, but the tech stocks fell Wednesday. Many blamed the decline on fallout related to Cisco's two-day-old earnings report.
Cisco reported earnings Monday after the markets closed and told investors its inventory of raw materials, which includes chips, more than quadrupled to $631 million in the quarter ended Oct. 28 from $145 million in the fourth quarter. Cisco probably will look to reduce this buildup within the next two quarters, placing fewer orders with its semiconductor vendors, analysts said.
In after-hours trading Monday and Tuesday, Cisco shares fluctuated from positive to negative as investors interpreted the report. At the end of regular trading Wednesday, Cisco shares closed down $4.63 to $52.13.
"Cisco's numbers were a boiler plate of Nortel's numbers," said Bob Gasser, head of U.S. equity trading at J.P. Morgan.
Shares of Nortel Networks fell 29 percent Oct. 25 after the company reported earnings that missed Wall Street's revenue expectations.
Nortel also reported growing inventory for its third quarter. The network equipment maker's inventory increased to $4.06 billion from $2.82 billion at the end of 1999.
Even though Nortel, Cisco, and other optical equipment makers posted positive earnings, Gasser said investors may be concerned that the earnings do not justify the highly priced stocks. Cisco and Applied Micro Circuits, for example, have price-to-earnings ratios of well over 100.
Other large capitalization tech stocks also helped push the Nasdaq lower. Intel lost $3.50 to $42.69 and Sun Microsystems dropped $11.13, or nearly 10 percent, to $100.31.
Chip stocks also were hammered. The Philadelphia semiconductor index fell 50.78, or 7 percent, to 664.80, led by Xilinx, which lost $8.38, or about 13 percent, to $58.31.
Broadcom fell $24.69, or nearly 14 percent, to $151.81. The maker of chips for cable set-top boxes has lost 28 percent this week on concern over high inventory at Cisco. Applied Micro fell $7.56, or about 11 percent, to $61.31.
The CNET tech index fell 123.92 to 2,573.63. Losers trounced winners, with 86 of the 97 stocks in the index falling, 8 rising and three remaining unchanged.
Nearly all of the 18 sectors tracked by CNET Investor fell into the red. Server hardware companies and computer data storage makers posted the sharpest drops, falling about 9 percent each. Communication services companies were the day's only gainers, climbing a scant .06 percent.
Priceline.com hit new lows Wednesday after it confirmed that one of its executives resigned. Shares of the name-your-price e-tailer fell $1.03, or 24 percent, to $3.25 and traded as low as $3.22, a new 52-week low. Priceline once traded as high as $104.25 over the same period.
Other e-tailers also fell. Amazon.com dropped $3.06 to $33.88; eBay lost $5.06 to $51.63; and eToys fell 78 cents to $2.56.
Shares of Art Technology Group, which makes Internet advertising software, fell $9.56, or 17 percent, to $45.75. A regulatory filing showed that the company had understated the amount owed by its customers, which attracted criticism from analysts.
The company's third-quarter earnings statement, issued Oct. 26, said Art Technology had $33 million in sales made on credit to customers. In a government filing Monday, the company said the figure excluded $9.6 million in sales made on credit that it had sold to a bank. Companies sell such accounts receivable to raise cash faster than waiting for buyers to pay their bills.
TMP Worldwide fell 38 cents to $71.75. The advertising and marketing company that owns Monster.com reported earnings before acquisition-related costs of 30 cents per share, beating the consensus estimate of 27 cents per share. The company also raised its 2001 forecasts, projecting it will earn between $1.36 and $1.40 a share in 2001 before acquisition-related costs.
Winstar rose $3.13, or nearly 14 percent, to $25.50. The broadband services company said it raised $1 billion in financing, including a $270 million investment from Microsoft, Compaq Computer, CSFB Private Equity, and Welsh, Carson, Anderson & Stowe VIII in the form of convertible preferred stock.