RealTime IT News

Election Jitters Keep Stocks On Defensive

Stocks remained on the defensive as traders awaited the outcome of the closest presidential election since at least 1916. Internet stocks remained under pressure on earnings worries.

A recount in Florida, expected to be completed this afternoon, made the outcome of the presidential race in that state even closer, reducing Texas Gov. George W. Bush's lead to 793 votes. With a court challenge questioning Palm Beach County voting and 30,000 foreign absentee ballots due Nov. 17, the outcome may still be in question for days to come. The selling intensified as Democrats announced further challenges to the Florida vote.

The ISDEX dropped 56 to 579, and the Nasdaq fell 78 to 3152. The S&P 500 lost 18 to 1390, and the Dow declined 125 to 10,781. Volume rose to 475 million shares on the NYSE and 873 million shares on the Nasdaq. Decliners led by 16 to 9 on the NYSE and 23 to 10 on the Nasdaq. The Producer Price Index came in stronger than expected, but the core rate came in better than expected. Dell Computer will report earnings after the close tonight. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

Internet advertising stocks were weak on earnings warnings from 24/7 Media , off 1/2 to 3, and Engage , down 1 1/4 to 2 1/4. DoubleClick lost 3 11/16 to 15 1/16, and Yahoo dropped 6 3/16 to 58 13/16.

Internet Capital Group , off 5 1/2 to 10 3/4, reported disappointing earnings and announced a 35% workforce reduction. CMGI lost 4 1/17 to 17 3/4. Digital Island , off 7/8 to 10 7/16, beat estimates but lowered forward guidance.

eBay , off 4 3/16 to 47 7/16, continued to lose ground after announcing layoffs.

Internet infrastructure companies continued to struggle in the wake of cautionary comments from Cisco Systems . Juniper lost 13 7/8 to 174 5/16, but Broadcom recovered 3 11/16 to 155 1/2 after announcing that it is "very comfortable" with analysts' projections.

America Online lost 3.90 to 52.40 on Internet advertising concerns and a Federal Trade Commission vote on the company's merger with Time Warner.

DSL.net slipped 19/32 to 2 5/32 after beating estimates.

Some technical comments on the market: Note: We are now including charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The uncertainty over the presidential election throws a wrench into what was already a difficult market hampered by concerns over earnings and a slowing economy. The presidential uncertainty is temporary, and should be met with a relief rally when it is settled. However, the news that Democrats were expanding their efforts in Florida caused the S&P 500 to break its large rising wedge. That break came at least 7-8 trading days before the two-thirds point, where wedges typically break. The breakdown gives the S&P downside to 1300; we'll see if it can recover.

The Nasdaq 100 has downside potential to 2700 based on its breakdown two days ago; the index's low today is 2923. However, given that that pattern also could be seen as either a head and shoulders pattern or a 500-point trading range, the index could have downside to 2500 or lower