- The Washington Times - Wednesday, November 15, 2000

Stocks surged yesterday from their lowest levels in a year, aided by news that the bitterly contested presidential vote could be settled this week.
A decision by a Florida judge to uphold yesterday's deadline for counting votes in that state helped catapult the Nasdaq Composite Index by 172 points, or 6 percent, to 3,138 after falling below the critical 3,000 level Monday. The Dow Jones Industrial Average spurted to a gain of more than 200 points after the announcement and ended up 164 at 10,681.
"After several days of this election, it finally looks like we'll have an answer," said Joseph Pregiato, a trader at Josephthal & Co. in New York, adding that the growing threat that the election quagmire would drag down the dollar as well as stocks may have been averted by the court decision.
"Internationally, it means [investors] won't give up" on U.S. stocks and bonds, he said.
The financial markets have been fixated by one of the closest presidential races in a century, falling sharply Thursday afternoon after Democrats threatened an open-ended contest of the Florida vote in the courts. Tensions remained high yesterday despite the Florida judge's decision, with key campaign aides disagreeing even on the role of the markets.
Former Secretary of State James A. Baker III, speaking for Texas Gov. George W. Bush, the Republican presidential candidate, said it was imperative to reach a decision in the contest soon, partly to avoid further riling the markets here and abroad.
"Why are the markets disturbed? Because they don't see any finality here," he said at a news conference in Florida.
But former Commerce Secretary William M. Daley, spokesman for Vice President Al Gore, the Democratic candidate, said the legal wrangling had nothing to do with the markets' fall.
"The markets go up, the markets go down," Mr. Daley said at a news conference on Capitol Hill. "I think most honest observers of the market today would say that, if there are changes in the market, they're a result of some of the earning statements that have been put out by the companies, having nothing to do with what's gone on in the last week in the political world."
Positive earnings news from Wal-Mart and other retailers helped lift the market yesterday, while dismal reports from high-tech companies helped drive it down last week. But many Wall Street analysts say the election also is playing a central role in the market drama.
"The closest, tightest and most contested U.S. election since 1876 has left the U.S. possibly effectively leaderless, divided and without clear direction," said Allen Sinai, president of Primark Decision Economics Inc. in New York, saying the protracted contest is weighing on the dollar and stocks around the world.
"This is a major element in why the U.S. and related equity markets have done so poorly after election day," he said.
Mr. Sinai said he is concerned that the legal impasse will turn into "big-time" legislative and political gridlock even after the election's outcome is decided, rendering the government incapable of responding to a downturn in the economy or other emergencies that might arise.
"History teaches that the performance and functioning of a central government in any country can be decisive for financial markets and the economy," he said. "The 'engine' of the world economic upturn of the 1990s … might be out of commission."
L. Douglas Lee of Economics from Washington Inc. was not so alarmed, noting that while the electorate was sharply divided between the candidates, both Mr. Gore and Mr. Bush ran on centrist platforms and promised only moderate changes.
"We do not subscribe to the conventional wisdom that gridlock was the victor in this year's election," he said. "The victor was moderation. When the outcome of the election is final, the markets will view it positively."
Yesterday's rally showed how quickly the clouds might disperse on Wall Street once the results are known. Abbey Joseph Cohen, investment strategist at Goldman, Sachs & Co., said worries about the election and high oil prices have preoccupied investors to the point that they haven't noticed the positive news about the economy.
The economy is slowing, but to a healthy rate of growth, inflation remains in check, and the chances that the Federal Reserve will raise interest rates again have lessened notably, she said, urging investors to snap up stocks at the bargain-basement prices seen Monday.
Gregory Nie, a technical analyst at First Union Securities, said last week's sell-off was overdone, but he suspects yesterday's rally may not stick around long either.
"The market is thinking there is some possibility or some hint that we might get much closer to a resolution of this political situation, although I still think it's up in the air," he said.

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