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Dow drops as exit poll talk hits market
The Dow Jones industrial average fell on Tuesday in a sharp reversal that trimmed gains in other indexes as Internet sites suggested exit polls had Sen. John Kerry ahead of President Bush in key states in the U.S. presidential race. Shares of defense, pharmaceutical, health care and medical technology companies led a reversal that sharply trimmed gains and moved major indexes lower at about 2:48 p.m. after traders heard about the exit poll speculation on the Internet. "Apparently the blogs are saying that Kerry is ahead in one or two of the swing states and that's why the market dipped," said Lisa Hansen, head trader at Transamerica Investment Management, referring to the blogs, or Web logs, which are a mix of news, gossip and opinion. The Dow Jones industrial average fell 18.66 points, or 0.19 percent, to end at 10,035.73. But the Standard & Poor's 500 Index eked out a gain of just 0.05 of a point -- unchanged from a percentage standpoint -- to close at 1,130.56, its sixth day of gains. The technology-laced Nasdaq Composite Index rose 4.92 points, or 0.25 percent, to finish at 1,984.79. All three gauges had been higher, with the blue-chip Dow average heading for a sixth straight day of gains, when traders got wind of what some Internet sites were saying about the exit polls. But some cast a skeptical eye on the Internet speculation. "I simply don't buy these numbers. That doesn't mean that Bush may not be losing right now or that the Kerry people are unwarranted in their alleged happiness right now," said Jonah Goldberg, editor-at-large at National Review Online. In the stock market, trading was active, with 1.67 billion shares changing hands on the New York Stock Exchange, above the 1.4 billion daily average for last year. About 1.86 billion shares were traded on Nasdaq, higher than the 1.69 billion daily average last year. On the NYSE, about six stocks rose for every five that fell. On Nasdaq, advancing and declining stocks were roughly even. Turnout was unusually high as Americans voted to decide whether the Republican incumbent Bush or the Democrat rival Kerry would be the next U.S. president. The S&P health care sector index, made up of companies that Wall Street believes would do well under a second Bush term, slid 1.5 percent in the 30 minutes after the market became aware of the Internet speculation. But the S&P health care sector index recovered most of that decline and closed off only 0.09 percent. Health insurer Humana Inc. closed down 66 cents, or 3.24 percent, at $19.69. Drug maker Pfizer Inc. fell 10 cents, or 0.35 percent, to $28.70. Its rival, Merck & Co. lost $1.48, or 5.23 percent, to $26.80, on worries about its potential liability over problems related to its arthritis drug Vioxx. Merck ranked as the Dow's biggest percentage decliner. Defense stocks also slipped on prospects of a Kerry victory, with the S&P aerospace and defense index off 1.28 percent. The biggest decliners included General Dynamics Corp., down $1.86, or 1.82 percent, at $100.48, and Lockheed Martin Corp., down $1.68, or 3.01 percent, at $54.11. General Dynamics was viewed as a Bush stock since it makes hardware like military vehicles and ships, while the president's focus on missile defense was seen helping shares of companies that make the equipment and technology.
Some investors said a Kerry sell-off might be short-lived. "Fundamentally, there is nothing to indicate that Kerry will be bad for the market," said Som Dasgupta, head of equities trading at PNC Corporate Bank. "There are all kinds of statistics around (that) if the incumbent is a Republican and a Democrat wins, then the initial market sell-off is 1.5 percent. Then the market comes back up around 2.8 percent through January." Stocks had been helped earlier in the session by falling oil prices, as crude fell below $50 a barrel to the lowest settlement price in more than a month. The December crude futures contract settled at $49.62, down 51 cents, on the New York Mercantile Exchange. "Breaking below $50 was huge," said Todd Clark, head of listed trading at Wells Fargo Securities. Last week, U.S. crude futures hit a record, close to $56 per barrel. Energy-sensitive issues, including airlines, attracted buyers, with the American Stock Exchange airline index rose 3.76 percent to its highest point since mid-July. Continental Airlines shares gained 58 cents, or 6.07 percent, to $10.14,
Northwest Airlines Corp. advanced 32 cents, or 3.47 percent, to $9.54, and
JetBlue climbed $1.38, or 6.19 percent, to $23.69. |
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