/ciol/media/agency_attachments/c0E28gS06GM3VmrXNw5G.png)
Follow UsNEW YORK: US stocks ended a dismal week with a sharp sell-off on Friday, as
the market was plagued by worries about the cliffhanger presidential election
and slowing technology profits.
Short-term US Treasury securities and the dollar rose amid safe-haven buying,
while oil prices edged higher ahead of a Sunday meeting of the Organization of
Petroleum Exporting Countries (OPEC).
"It's a combination of two things: the uncertainty as far as the
election is concerned and ... worries about earnings, particularly in the
technology sector," said Credit Suisse Asset Management managing director
Stanley Nabi.
Wall Street was on edge all week, awaiting the outcome in the cliffhanger US
presidential election between Republican George W Bush and Democrat Al Gore.
The uncertainty - always bad for the stock market - was augmented by investor
worries that the big growth years for the personal computer industry may have
passed.
The Nasdaq Composite Index slumped 171.36 points, or 5.35 per cent, to
3,028.99, its lowest close for the year. The technology-packed index fell 12.2
per cent for the week and was down more than 25 per cent year-to-date.
The sell-off was broad: three stocks fell for every one that went up.
The Dow Jones industrial average sank 231.30 points, or 2.13 per cent, to
10,602.95, weighed down by weakness in shares of computer makers like
International Business Machines Corp. The blue-chip index ended the week down 2
per cent and is off nearly 8 per cent for the year.
The broader Standard & Poor's 500 Index was off 34.16 points, or 2.44 per
cent, at 1,365.98.
Once the elections are out of the way, Wall Street will start focusing on the
usual suspects - earnings and interest rates. That means stocks could rally in
coming weeks, especially if the US Federal Reserve leaves interest rates alone
at its meeting next Wednesday, analysts said.
"There's this kid named Greenspan playing quarterback, and he's done a
darn good job," said David Sowerby, market strategist for Loomis Sayles in
Detroit, referring to Fed Chairman Alan Greenspan. "That's
comforting."
Thin trading exaggerated the market's price moves on Friday, analysts said,
because many banks and government offices were closed for Veterans Day.
Dell late Thursday cut its sales growth projection for next year to 20
percent, much lower than its historical growth rate. That overshadowed a 40-per
cent jump in quarterly profits.
"Dell is just another indication that as the economy slows down, these
tech stocks that have been priced for quantum increases in sales and earnings
are suspect," said James Volk, co-director of institutional trading at DA
Davidson & Co.
The No. 2 PC maker's shares tumbled $5-3/8 to close at $23, a drop of 18 per
cent that brought it near a year-low $22-1/16.
Other brand name computer makers also suffered, including Dow 30 members IBM,
down $6-7/16 to $93, and Hewlett-Packard Co., off $3-13/16 at $39-1/8. Compaq
Computer Corp., the most active on the NYSE, ended down $1.41 at $25.70.
The American Stock Exchange's computer hardware index fell 8.1 per cent.
The world's top computer chip maker, Intel Corp., was caught in the
downdraft, falling $4-3/8 to $37 after Wall Street powerhouse Morgan Stanley cut
its rating on Intel, citing weak PC demand. Microsoft Corp., which supplies the
operating systems for the PC industry, fell $3-1/2 to $67-3/8.
Retailers also were hit after a number of them reported a drop in
third-quarter earnings and electronic giant Best Buy Co. Inc. Thursday warned a
slowdown in consumer spending would depress profits in the second half.
Retailing giant and Dow component Wal-Mart Stores Inc. slumped $3-7/16 to
$43-11/16, and the Standard & Poor's Retail fell 6.2 per cent.
Investors rushing out of the retail and high-tech sector, and scooped up
old-line shares of companies in the food, drug, health care, energy and consumer
products sectors.
Drug giant Merck & Co. was up $1-1/16 at $91-1/2. Also underpinning the
blue chip gauge was consumer products titan Procter & Gamble, which climbed
$2-1/8 to $71-5/8.
The question of who will emerge as the victor in one of tightest presidential
races in history threatens to drag on for days, possibly weeks, leaving Wall
Street with what it hates most - uncertainty.
At the 5 pm New York close, the benchmark 10-year Treasury note rose 3/32,
while the yield, which moves in the opposite direction, slid to 5.79 per cent
from 5.81 per cent Thursday. The 30-year bond fell 2/32, or 62.5 cents for each
$1,000 of face value. The yield edged up to 5.87 per cent from 5.86 per cent.
In late US trade, the euro slipped just below 86 cents, although lingering
worries that the European Central Bank (ECB) might again step into the markets
kept dealers from selling the single currency aggressively.
The dollar also extended overnight gains against the yen, hitting its highest
levels in a week near 108 yen in the wake of news that Japan's Economic Planning
Agency (EPA) downgraded its assessment of the economy for the first time in two
years.
At the New York Mercantile Exchange, crude oil futures for December delivery
ended 10 cents higher at $34.02 a barrel.
Heating oil futures for December delivery finished 0.84 cent lower at $1.0075
a gallon, and December gasoline futures fell 0.69 cent to 86.97 cents a gallon.
Overseas, London's FTSE 100 closed at 6,400.2 points, down 42 or 0.65 per
cent, but up on the week by 14.8 points. In Tokyo, the benchmark Nikkei average
closed down 71.51 points or 0.47 per cent at 14,988.54, up 150.76 from November
2.
(C) Reuters Limited 2000.