Why Al Is Hoping Intel's Flu Isn't Contagious

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Ask not for whom the bellwether tolls, 'cause it's tolling for just about everybody.

The dire peals of Intel's Thursday-night bad news — that Q3 earnings would grow only 3 to 5 percent from the company's second-quarter numbers, and not the 6 to 8 percent growth once expected — have been reverberating westward across the globe since Thursday night and giving investors headaches all the way. Tokyo, Hong Kong, Frankfurt, London... and now back to Wall Street, where losses that had been piling up all night — to record volume for electronic-trading networks — came gushing out with the morning bell (NASDAQ falling 194 points in 13 minutes dramatic enough for you?). A very bad end to a lousy week.

Intel, see, is the bluest of the blue-chip tech stocks, considered the sector's best indicator of where the overall high-tech winds are blowing. It's a member of the Dow, NASDAQ and the S&P, which is the practical reason why Wall Street's trio of indexes all tanked on the news. But the spiritual malaise is just as contagious; Microsoft, Dell and Cisco all took overnight hits as well. Intel's announcement also comes early in a third-quarter earnings season that investors are nervous enough about already. Bad earnings news revives fears that Greenspan's soft landing may be a rocky one for corporations.

Then there's the culprits. Intel blamed sagging European demand — this to go with news that the European Central Bank is intervening on behalf of the euro, a real sign of desperation in E.U.-land — and the bane of both continents, rising oil prices.

Which brings us to Al Gore. If corporate earnings are indeed as flat this quarter as indicator Intel is indicating, the markets could be in for a nervous October. Uncertainty — over earnings, over oil prices, over the dollar, over Greenspan's landing and over the election itself — could keep the Dow in the dumps till November. And the Dow, as the New York Times was good enough to point out Friday, is 22-3 as an election prognosticator this century. Dow goes up in fall, economy looks good, incumbent wins. Dow goes down in fall, people worry, new guy wins.

But by mid-morning, the free-fall was leveling off. Selling Intel — down 13 points at 10:30 — in the middle of a bloodbath may be good business for the pros, but American investors are well schooled in the buy-and-hold. And they know that a brief run of bad sessions in September — or the one-time underperformance of a stock up 49 percent for the year when the news hit — do not an incumbent-ousting recession make. A few sprightly earnings numbers from the tech sector in October, and the current gloom could be a distant memory.

Which is not to say that somewhere deep inside, Al Gore isn't wondering if the government couldn't take a few million chips off Intel's hands, just to nip this thing in the bud.