Dow and the
Nasdaq rocketed forth shortly after the open this morning following news that Gore could make a concession speech later this evening. But the indices later pulled back and the Nasdaq was lately simmering right under the flatline.
Tech and financial shares battered by earnings woes were being battered some more. Bush stocks, such as tobacco, drugs and
were getting a lift.
, however, was giving a lift to the Dow. The financial giant, which has rallied in recent days, was showing the most muscle on the blue-chip index, adding 21 points to the upside.
The U.S. Supreme Court ruled 5 to 4 late Tuesday night to reverse last Friday's ruling by the Florida Supreme Court that had said vote recounts could continue. The nation's highest court cited constitutional problems with a new vote recount and said the problems could not be fixed before the Electoral College deadline. The Electoral College meets on Monday.
Improved chances for an interest-rate cut in this morning's
retail sales numbers gave some fuel to the Dow. This morning's economic data showed retail sales slowed sharply in November, dragged down by weak auto sales. The headline number fell 0.4% vs. forecasts of a 0.1% rise while the core number, which excludes automobile sales, rose 0.2% vs. expectations of a 0.3% climb.
Semiconductor stocks were hurting following a slew of downgrades on semi capital-equipment companies, however.
Salomon Smith Barney
downgraded 12 and Merrill Lynch downgraded eight companies in that sector this morning, including
Philadelphia Stock Exchange Semiconductor Stock Index
was lately down 2.4%. PC-makers were also falling.
Companies that issued earnings warnings last night and this morning, such as computer-maker
were falling this morning.
and online marketing company
also warned. Compaq became the latest computer-maker to
disappoint and say its earnings wouldn't be on track. And Whirlpool said it
would miss fourth-quarter 2000 and first-quarter 2001 earnings targets. Companies issue earnings warnings when they expect to miss their earnings targets for the quarter.
A Bush administration is seen as less invasive to the economy and markets. Considered lighter on reform and easier on antitrust matters, he's perceived as
particularly favorable to the drug and tobacco companies and to Microsoft. He is also seen as favorable to the energy, oil and defense stocks. But market-watchers believe he's a negative for environmental stocks and for bonds. If Bush does emerge as the winner, the biggest question is whether he could push through his whopping tax-cut plan. Many think that with Congress in gridlock, the tax cuts are unlikely.
Still, resolution on the elections front doesn't mean it's straight up from here. The market has plenty of other worries to grapple with -- signs of sluggish
capital spending, a thriftier consumer and burgeoning credit risk. All this has some Wall Streeters fearing the economy is headed toward a recession.
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Drug stocks and tobacco stocks were charging higher this morning as they are seen as beneficiaries of a Bush win. The
Philadelphia Stock Exchange Pharmaceutical Index
was rising 1.8% and the
American Stock Exchange Tobacco Index
was rising 2.1%.
Despite general strength in the drugs sector, pharmaceutical giant
was falling -- down 0.1%.
On the tobacco front,
was rising 5.6% and
R.J. Reynolds Tobacco Holdings
was climbing 7.4%.
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Treasury prices were higher on light volume, with about half of the gains coming after the release of data showing that consumer spending on goods fell sharply in November, signaling that economic growth may continue to slow.
The benchmark 10-year
Treasury note lately was up 9/32 at 103 8/32, dropping its yield to 5.315%.
Treasuries rose in spite of predictions that a Supreme Court ruling in favor of Republican presidential candidate
George W. Bush
would have the opposite effect. Because Bush is seen as the preference of stock investors -- and likely to run smaller federal budget surpluses than Democratic candidate
would have -- a ruling that effectively makes Bush the victor was expected to have at least a small negative effect on the bond market.
) report showed a 0.4% decline in consumer spending on goods, widely missing economist predictions that it would rise slightly. Even though the bulk of the decline was in auto sales (excluding autos, retail sales rose 0.2%), the report suggests that the pace of consumer spending is slowing, leading the entire economy to a slower growth rate.
That increases bond investor optimism about the prospect that the
Fed will lower interest rates in the months ahead. Traders of
fed funds futures have upgraded the odds -- to nearly 100% from 88% -- that the Fed will lower the key short-term interest rate to 6.25% from the current 6.5%.
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