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Election Deadlock Fear Reverses Stocks' Rally

Associated Press
Wednesday, November 3, 2004; Page E03

NEW YORK, Nov. 2 -- The prospect of a tight race for the presidency -- and a repeat of the 2000 court battle -- prompted a late sell-off on Wall Street on Tuesday, with stocks finishing the session mixed despite a fresh drop in oil prices.

News of exit polls showing a tight race were a "sell" signal to investors worried that the election would be deadlocked. Most analysts agreed that a clear winner by Wednesday morning -- no matter which candidate -- would boost the market. But if the election appeared headed for a prolonged court battle as in 2000, stocks could fall sharply.

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"The worst thing that could happen is a contested election, because you'll see this bull run we've had over the past five or six days dissipate," said Peter Cardillo, chief strategist and senior vice president at S.W. Bach. "If somebody can declare victory, then this bull run could extend right through to the end of the year."

The uncertainty kept investors from enjoying another drop in oil prices, taking the price of crude below the $50-a-barrel mark for the first time in almost a month.

The Dow Jones industrial average fell 18.66, or 0.2 percent, to 10,035.73. The Dow ended a five-day streak of gains that had added 303.93, or 3.1 percent, to the index since last Tuesday. The Standard & Poor's 500-stock index inched up 0.07, to 1130.58, and the Nasdaq composite index gained 4.92, or 0.2 percent, to 1984.79.

Trading volume was higher than expected throughout the session as early confidence in a quick victory was wiped out by signs that it would indeed be a close contest. In 2000, the markets endured their worst post-election November since Harry Truman's upset victory in 1948.

"I think there's some money just waiting to come in once we have a winner in the election," said Michael Sheldon, chief market strategist at Spencer Clarke.

Emerson Electric gained $1.25, to $65.53, as the diversified manufacturer saw its net income jump 28 percent. The company beat Wall Street profit forecasts by 5 cents a share.

National Semiconductor lowered its profit forecast for the current quarter, citing sluggish sales and high inventories, much as Intel had done in September with its mid-quarter report. National Semiconductor tumbled 29 cents, to $16.40, while Intel climbed 17 cents, to $22.61.

Consumer products maker Clorox fell $1.38, to $53.77, after reporting that its first-quarter earnings fell 5 percent because of one-time charges stemming from a restructuring effort. The company still beat analysts' expectations by 3 cents a share.

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