- The Washington Times - Friday, November 10, 2000

Stocks plummeted yesterday as Democratic Party officials raised the specter of a prolonged legal battle over the outcome of the presidential race in Florida.
The Dow Jones Industrial Average nose-dived to a 288-point loss and the Nasdaq Composite Index dropped to a 144-point loss as Vice President Al Gore's campaign chairman, William M. Daley, announced at an afternoon news conference that the campaign would back citizen lawsuits contesting the outcome of the Florida vote with the goal of proving that Mr. Gore won.
The indexes recovered some by the end of trading, but analysts said that as long as the legal and political battle over the nation's highest office continues, it would be a major stumbling block for the markets. The Dow ended down 73 points at 10,834, and the Nasdaq ended down 31 points at 3,200.
"The Gore campaign is saying we'll fight to the end now," said Tim Neumann, an investment manager at Chase Asset Management, predicting that the legal questions raised by the Democrats will take weeks to resolve.
The principal issue raised by Mr. Daley was that the ballots used in Palm Beach County were confusing and caused the votes of more than 19,000 Florida residents to be disqualified because they mistakenly voted both for Mr. Gore and Reform Party candidate Pat Buchanan.
Aides to the Republican candidate, Texas Gov. George W. Bush, signaling their intent to counter the fight in the courts, maintained that double-voting is illegal everywhere and the votes were properly disqualified. They added that county residents voted heavily for Mr. Buchanan in previous primary elections.
"Until the election result is resolved, we will have down days," said Robert Streed, a stock portfolio manager with Northern Trust Co. "This is a seasonally very strong period so if this election uncertainty wasn't there we'd be looking at a higher market. We'd be in the midst of our normal year-end rally."
"There's two fears," said Arthur Hogan, chief market analyst for Jefferies & Co., who said the market went briefly into a "free fall" during the Gore campaign's announcement.
"First, the market absolutely abhors the unknown and that is what is going on. We have no idea how long and drawn out this election is going to be. Secondly, we continue to fear an economic slowdown and the impact of an economic slowdown on earnings and revenue growth," he said.
The Bush aides suggested that the legal struggle might not only be prolonged but also widened to include contests over tight votes in other states.
They said vote recounts may be ordered in Iowa and Wisconsin, where Mr. Gore won narrowly, and they have raised questions about the vote count in Albuquerque, N.M. New Mexico is another state that Mr. Gore barely won.
"The markets hate the uncertainty about who's going to be the next president," said Tom Schrader, head of listed trading at Legg Mason Wood Walker Inc. in Baltimore.
"Until it's decided, I don't see any" catalyst for stocks to go higher, he said. "Investors are telling me they want to lessen their exposure to stocks and have cash on the books."
Greg Smith, chief strategist at Prudential Securities Inc. in New York, recommended yesterday that investors cut their stockholdings because of the massive uncertainty created by the unprecedented close race not only for the presidency but also for control of both houses of Congress.
The schism in the political races suggests that the nation is in a state of fundamental disagreement over what to do with the federal budget surpluses and how heavily to regulate business, he said.

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