Politics Thwarts Rally
So much for a post-election rally. Stocks fell sharply Friday as the election
controversy deepened and showed few signs of any sort of simple resolution. With
dozens of lawyers and political operatives descending on Florida, market
participants retreated, sending stocks lower throughout the session where they
closed at their lows of the day.
The Nasdaq was hardest hit, losing 5.3%, following Dell Computer’s
less-than-spectacular earnings report. The loss leaves the Nasdaq down more than
25% for the year and just 3 points above its 52-week low of 3026.11 that it
established on October 18, 2000. The Dow and S&P 500 lost more than 2% each.
Despite meeting third quarter earnings estimates of 25 cents per share, Dell
Computer
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Salomon Smith Barney downgrade of Dell and Intel
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to injury of two of the 1990’s tech darlings. Intel fell 4 3/8 to 37.
The only consolation for stocks was the fact that the selling was orderly and
volume remained moderate, with 1.76 billion shares trading on the Nasdaq and 965
million shares changing hands on the NYSE.
“Three times over the past four years, the stock market has encountered
a crisis during the months of October and/or November. In 1997 it was the Asian
Crisis, in 1998 the currency crisis, and this year it’s the election
crisis,” said Brian Belski, Fundamental Market Strategist, U.S.
Bancorp/Piper Jaffray.
“Admittedly, we made the same deduction a few weeks ago when both the
Middle East situation and oil prices were peaking. But we believe the current
political crisis and the uncertainty adjacent to it is the kind of deep, left
field surprise whose final resolution should signal the end of the market’s woes
of the past ten weeks,” he added.
According to preliminary numbers, the Nasdaq fell 171.26 to 3029.09, the Dow
slid 231.30 to 10,602.95, and the S&P 500 lost 34.15 to 1365.99.
Among the few positive sectors were drugs
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$DRG.X |
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$IUX.X |
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$CMR.X |
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Biggest losing sectors were semiconductors
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technology
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One bright spot for tech was Qualcomm
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15/16.
Dow winners were McDonald’s
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MO |
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3.5%, and Procter & Gamble
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Hewlett Packard
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Looking ahead, the Federal Reserve meets next Wednesday, and analysts across
the board believe that interest rates will remain unchanged. Given the mess with
the election, perhaps the Fed will at least offer to lower their bias to neutral
on inflation.
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