A House Divided
A cloud of uncertainty continued to hang over the market Thursday, as tough
legal talk from the Gore camp suggested that the battle for the White House
could become protracted and possibly move to the courts. While stocks have
tended to love gridlock, they apparently prefer to at least have a president in
place to be gridlocked against.Â
Stocks fell sharply at the open and crawled back from mid-morning lows but
still finished negative on the day, as the Dow lost 0.7%, the Nasdaq fell 1.0%,
and the S&P 500 eased 0.6%.
Even some fairly positive economic news that showed yet more evidence to make
the case for a soft landing was not enough to ward off the election worries.
The PPI showed an increase of 0.4%, which was higher that the 0.1% decrease analysts expected, while the PPI core rate decreased by 0.1%, which was lower
than the expected 0.1% increase.Â
In addition, jobless claims spiked up to 344,000 following last week’s 308,000, which
suggests the cooling of the economy continues.
“I don’t see anything fundamentally wrong with the market. Technically
we haven’t really violated any substantial support levels, so what’s driving
this is the election and the psychology of the market is just basically the fear
of the unknown,” said Tim Heekin, Director of Trading, Thomas Weisel
Partners.
“Not having a resolution to the Presidency of the United States has just
caused some concern, but as soon as the election is resolved, I think you’ll
get a bounce. You’ll get a bigger bounce if it’s a Republican, and if it’s a
Democrat, you’ll likely get a little hiccup to the downside which would be
followed by a nice bounce to the upside,” he added.
According to preliminary numbers, the Nasdaq fell 31.35 to 3200.35, the Dow
lost 72.81 to 10,834.25, and the S&P 500 slipped 9.14 to 1400.14.
Top sectors were insurance
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up 1.1%, and semiconductors
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Under pressure were oil services
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down 4.0%, and Internets
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Techs that turned it around Thursday included SDL Inc.
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238 5/16, PMC Sierra
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up 10 5/8 to 162 7/16.
Dow winners were Coca-Cola
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and Boeing
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and Disney
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Looking ahead, next week’s Federal Reserve meeting is scheduled for
Wednesday, and most analysts expect the Fed to leave rates unchanged.