Dow Falls 45.12 to 10,907.06; Nasdaq Tumbles 184.09 to 3,231.70; Presidential Race Too Close to Call
STUART VARNEY, CNN ANCHOR: ... Stuart Varney. It will go down as one of the closest presidential elections in American history, and it is not over yet.</s>WILLOW BAY, CNN ANCHOR: No, it is not. The fate of the White House hinges on a painstaking recount of votes in just one state: Florida. And the results of that recount have been trickling in. We'll check in with Wolf Blitzer and we'll get the very latest with a live report from Florida. But first, Stuart takes a look at a dramatic day on Wall Street.</s>VARNEY: And dramatic it was. Investors today woke up, if they slept at all, after a night of political twists and turns. Early on, they showed resilience in the face of great uncertainty, with both the Dow and the Nasdaq trading higher. But as the election cliffhanger wore on, that resilience wore thin. And adding some tension: renewed concerns about profits and growth in high-tech business. After breaking back above 11,000, albeit briefly, the Dow lost its footing and ended down 45 points at 10,907, the volume relatively light at just over 900 shares. The Nasdaq got pounded in its worst session in weeks, plunging 184 points, that's over 5 percent, all the way down to 3,231, the volume there also relatively light, just over 1.6 billion shares. The S&P; 500 fell 22 1/2 points, that's about 1 1/2 percent, it moved down to 1,409. As for the bond market, little changed, traders awaiting word on the election -- the 10-year note up 2 ticks, the 30-year bond up about 1/4 of a point. Clearly, tech stocks bore the brunt of the selling today, and while profit fears were key, the presidential guessing game may have played a role as well. Allan Chernoff joins us now with more on that one -- Allan.</s>ALLAN CHERNOFF, CNN CORRESPONDENT: Thank you, Stuart. In very broad terms, George W. Bush is more of a Dow stock candidate, Al Gore more of a Nasdaq man. While there were other factors influencing today's trading, many investors today were doing exactly what they had done in the weeks leading up to the election, anticipating a Bush victory.</s>CHERNOFF (voice-over): So-called "Bush stocks" picked up where they left off before the election: standing out as leaders of the stock market -- oil drillers, hospital management, tobacco, and pharmaceutical shares.</s>MARY FARRELL, PAINEWEBBER: Certainly, industries that would be most hurt by a Gore victory would be companies in the drug industry, particularly the pharmaceutical companies, also other health care- related, tobacco companies.</s>CHERNOFF: Merck benefited from a Lehman Brothers upgrade. Lilly, Pharmacia, American Home Products and Johnson & Johnson also continued gaining. Philip Morris, R.J. Reynolds, British American Tobacco, Loews and Vector Group rose on anticipation of a more sympathetic administration taking over the White House. While Al Gore has been loosely tied to the technology sector, fundamental factors were mainly responsible for pushing Nasdaq stocks lower. Continued worries about cutbacks in telecommunications equipment spending weighed heavily on component suppliers. Volatile networking chip makers tumbled for the second day in a row, Xilinx, Vitesse, Applied Micro Circuits and PMC Sierra. Fiber- optics firms slumped: JDS Uniphase, Corning, Ciena and Nortel. And providers of high-speed connectivity equipment for storage fell: QLogic, Emulex, Brocade and</s>JNI. ART HOGAN, JEFFERIES & COMPANY: Supply is finally catching up with demand in a sector that doesn't need that to happen real soon, so I think that that's why you are seeing a bit of a sell-off in the space. I don't think it's long term.</s>CHERNOFF: Investors are particularly nervous that some long-time Nasdaq leaders have been breaking down, such as Oracle, down 17 percent this week alone.</s>CHERNOFF: Technical analysts who would not place any importance on the presidential election are feeling smug at the moment. As we reported, they had been warning the Nasdaq composite would hit a resistance level at about 3,500. Sure enough, after hitting 3,480 intra-day on Monday, the Nasdaq has been pulling back. And, Stuart, we should point out that even though traders are saying tobacco, pharmaceutical stocks actually would benefit under a Bush administration, there is no guarantee of that of course, if even Bush does carry the election.</s>VARNEY: Correct. Allan Chernoff, thanks very much. Well, today's postelection reaction on Wall Street came in contrast to the last two presidential contests, and no surprise given that during those trading sessions, investors at least knew who had won. Well, both the Dow and the Nasdaq rose more than 1 percent, that was when President Clinton was re-elected in 1996. The Dow posted a modest loss the day after Mr. Clinton's first victory in 1992.</s>BAY: Today, of course, it was the Nasdaq that got pummeled, with yesterday's losers taking it on the chin again: those telecom chipmakers. Also hit hard: Internet stocks. John Metaxas joins us now from the Nasdaq market site with a look at the worst sell-off for the index in weeks -- John.</s>JOHN METAXAS, CNN CORRESPONDENT: Willow, that it was a day of uncertainty was evident by the slow and steady decline of the Nasdaq to close at session lows, but tempered by the lower than normal volume that we got today. Cisco Systems a big loser, down 8 percent, fears of that telecom spending slowdown helping to erase the gains this stock had yesterday and send it back down to the $52 level. In fact, all of the big caps here at the Nasdaq were lower, strong -- or sharp losses, rather, for Sun Microsystems, down about 10 percent on the day. And the Cisco suppliers once again weak today, that inventory overhang for Cisco threatening to weaken the sales of such companies as Broadcom, which was down 14 percent on the day. Internets also had a bad day, starting with Priceline.com, the second major executive in a week to quit that company, Maryann Keller saying in an interview she thinks that the experiment of selling cars online has failed, Priceline down a dollar at $3.25. And eToys losing 78 cents at about $2.50. Henry Blodget of Merrill Lynch coming out with some negative comments about the dot.coms, highlighting how difficult it has been for them to raise the money they need to reach profitability, he brought eToys down to a neutral, the stock falling to a new low today. Nasdaq down today sharply and some analysts think we may test 3,000 before we can perhaps even make another move toward that 3,500 level -- Willow.</s>BAY: John Metaxas at the Nasdaq market site -- thanks, John. There was hope today that the Dow might manage to end in the plus column, but that hope had vanished by the closing bell, the index ending near its low for the day. So let's go to Terry Keenan at the New York Stock Exchange for a look at the big board movers -- Terry.</s>TERRY KEENAN, CNN CORRESPONDENT: Well, Willow, gridlock in a landslide, that was the bullish spin that Wall Street was putting on the election results, or non-results, this morning. But like last night's projections, by the end of the day many traders here were taking back their early call on things, and that is one big reason why both the Nasdaq and the Dow closed at or near their lows of the day. Art Cashin (ph), the legendary trader down here put it to me bluntly, he said a tight race is one thing, but if the Florida results wind up in the courts, Wall Street is not going to like it and he attributed that concern to today's sell-off. Now, Greg Valliere of the Washington Research Group put an even more negative spin on things, telling me that no matter what happens, this election will go down as tainted, something that will hurt the credibility of the new president. That said, traders still were positioning themselves for what the market seems to believe will be an eventual Bush victory, buying those drug stocks, as Allan mentioned, and sending Merck to a new high. Taking a look at what else was moving in the Dow: Intel was by far the biggest loser among the Dow 30 today, falling 3 1/2, a decline there of more than 7 percent. Citigroup and J.P. Morgan also losers in a weak financial sector. To the upside, in addition to those drug stocks, we saw some buying in ExxonMobil, even though oil prices were virtually flat. Procter & Gamble also up a dollar. As for the market breadth, it was negative, about 15-13 in favor of decliners. The telling number here, however, was that volume coming in at about yesterday's anemic levels, and that is one sign that the real gridlock today was on Wall Street, where traders were truly stunned by what happened in last night's election -- Willow.</s>BAY: Terry, IBM had some news after the bell, what's going on there?</s>KEENAN: Yes, I mean, that's another thing that may weigh on trading tomorrow, IBM currently trading down $2 at 98, the company held its fall meeting with Wall Street analysts today and it said that wide availability of its newest mainframe will be delayed until the start of next year, and that, of course, is a big concern about the fourth quarter, because IBM's revenues came in late in the third quarter. So that news weighing on IBM shares tonight -- Willow.</s>BAY: Terry Keenan at the big board -- thanks, Terry -- Stuart.</s>VARNEY: Now, the very latest on the presidential cliffhanger. Let's go to Wolf Blitzer, who has been following all the election results, for a complete roundup -- Wolf.</s>WOLF BLITZER, CNN ANCHOR: Thank you, Stuart. It was only 24 hours ago that the first polls began to close, and tonight we still do not know who will be the next president of the United States. One state holds the key: Florida. Officials there are scrambling to recount the state's nearly 6 million votes. The race between Texas Governor George W. Bush and Vice President Al Gore was so close in Florida that state law mandated a recount. Bush emerged this afternoon from the governor's mansion with running mate Dick Cheney to stake his claim to the Oval Office.</s>GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: This morning brings news from Florida that the final vote count there shows Secretary Cheney and I have carried the state of Florida. And if that result is confirmed in an automatic recount, as we expect it will be, then we have won the election.</s>BLITZER: In the initial count, with only absentee ballots from Florida residents living overseas still to be counted, the tally showed Bush was ahead by some 1,700 votes. And whoever wins Florida will win the state's 25 electoral votes. As the tally stands now, Gore holds 260 electoral votes to Bush's 246. Also still undecided tonight is Oregon, with seven electoral votes. Vice President Gore won the national popular vote, leading the governor by about 170,000 votes. Gore made his first public appearance later in the afternoon. He called the uncertain outcome an extraordinary moment for U.S. democracy. Gore also said the race should be decided quickly but with no rush to judgment and that the U.S. Constitution must be respected.</s>AL GORE, VICE PRESIDENT OF THE UNITED STATES: Despite the fact that Joe Lieberman and I won the popular vote, under our Constitution, it is the winner of the electoral college who will be the next president. Our Constitution is the whole foundation of our freedom, and it must be followed faithfully.</s>BLITZER: As the candidates and the nation awaited the recount in Florida, that state's governor, Jeb Bush, brother of George W. Bush, promised that the promise would be carried out fairly. CNN's John Zarrella is in Tallahassee, Florida. John, tell us what is the latest.</s>JOHN ZARRELLA, CNN CORRESPONDENT: Wolf, actually, I'm in Fort Lauderdale, Florida, and here at Fort Lauderdale we are at the area where they did the recount in Broward County today, where they had to recount 587,000 votes here. They finished up the process about an hour ago. It's one of about half a dozen of Florida's 67 counties that are already reporting in the results of the recount. In Broward County actually, the governor from Texas picked up 44 votes, more votes, and the vice president picked up 43 more votes in the recount. So actually, a net gain of one for the governor from Texas. The big story in Florida -- this is the focal point -- may narrow further even tomorrow. In Palm Beach County, a big dispute brewing over the actual ballot and how it was laid out. People, about 2,000 voters up there, now beginning to claim that they thought they were voting for Al Gore when, in fact, when they punched their cards they voted for Pat Buchanan, because it's laid out in a format that makes it a little bit difficult to understand. There's now a lawsuit. It was filed this afternoon on behalf of three Palm Beach County residents by two Boca Raton attorneys claiming that the vote should be thrown out. There's also a grassroots effort going on now, going door to door, asking that petitions be signed in Palm Beach County so that people can get a new vote in Palm Beach County -- Wolf.</s>BLITZER: John Zarrella in Florida, thank you very much. Both Bush and Gore have dispatched teams of lawyers and campaign representatives to Florida to oversee the recounting: Bush sending former Secretary of State James Baker while Gore sent former Secretary of State Warren Christopher. And that's the latest on this presidential cliffhanger, Willow. We'll continue to give you all the latest developments as they become available, and we'll have a special election edition of "THE WORLD TODAY." That's tonight at 8:00 p.m. Eastern, 5:00 p.m. Pacific. Back to you, Willow.</s>BAY: Thank you, Wolf. Coming up on MONEYLINE, the Republican Party may still hold the majority in Washington, but gridlock may rule the Hill more than ever. We'll check out why. And the confusion over the U.S. election was felt around the world, with overseas markets reacting to every new headline. That's ahead with MONEYLINE continues.