NEWS AND COMMENTARY
November 9, 2000
Nasdaq Drops 5.4% On Tech Worries, Election Uncertainty
By David Runk, The Wall Street Journal
Election Limbo Slams Market ... Weiss comments
NEW YORK - The Nasdaq Composite Index plummeted 5.4% Wednesday as investors grappled with uncertainty surrounding the U.S. presidential election and views that valuations in the technology sector were too rosy. Blue chips declined.
The Nasdaq composite closed down 183.74 points at 3232.05. The Dow Jones Industrial Average finished down 45.12 at 10907.06 despite support from some stocks expected to benefit from a Republican presidency.
"We're seeing the Nasdaq getting hit," said Peter Coolidge, a senior equity trader at Brean Murray. "The election results are a distraction, to say the least, and I think investors are still concerned about the lofty valuations of tech stocks."
The winner of the presidential election remained unclear Wednesday pending a recount in Florida. It could be Thursday before the results are known, leaving the market to stew in the uncertainty. Volume was relatively light for a third-consecutive session.
"The market is jittery, not just because of the election but because of fears of an economic slowdown and the impact of such as slowdown on corporate earnings," said Alan Ackerman, executive vice president and market strategist at Fahnestock & Co. "I think people are trying to play it safe. For now there seems to be more safety in value investing instead of growth investing, and that is putting pressure on the tech sector."
Chris Dickerson, market analyst at Global Market Strategists, said investors were concerned about the election tossup between Republican Gov. George W. Bush of Texas or Democratic rival Vice President Al Gore. Nevertheless, he said, worries about the effects of the slowing economy and technology spending played a major role Wednesday.
Without a clear winner, the financial markets didn't receive the traditional bounce that usually follows a Presidential election. Instead, paralyzed by political uncertainty, the market took a closer look at company earnings and the state of the economy. Investors clearly didn't like what they saw. The precipitous drop in the Nasdaq on Wednesday shows that the tech sector has not even come close to a bottom. Even the Dow, which had enjoyed a strong rally in recent weeks, fell as investors recognized that a Presidential election is not going to stop the slowdown in the economy.
The truth is the winner of the presidential election isn't the Republicans or the Democrats -- it's the bears! And very soon, there are going to be big losers on Wall Street.
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