If This Drags On, Watch for Market Mayhem

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Uncertainty is the bane of Wall Street, and in America you don't get any more uncertain than an Election Day that was everything but. The markets can't start dreaming of gridlock in Washington until they actually get a president-elect, so the Commotion by the Ocean down in Florida has laid a bit of a bad trip on traders and investors used to watching politics out of the corner of their eyes.

Obviously, it's hard to feel good about buying at a time like this. Volume on both indexes has been low since Tuesday, with few investors able to glimpse a happy future when nobody knows who'll be in charge. But it was the sellers that have pushed both the Dow and NASDAQ down in the three sessions since Non-Election Day, and for them it's just one more reason.

Valuations, earnings, growth rates — the old standbys are all there. Bad bottom-line outlooks on IBM, Disney and now, on Friday, Dell (the moment of silence on the trading floor was for Veterans Day, though, not the other Austin power).

A Fed meeting Wednesday, now in a whole different context than anybody expected. The Fed won't move, but it may tinker with its bias, and in the current Washington vacuum, Alan Greenspan's voice could have strange reverberations.

These are the same sort of traditional market woes that haunted Wall Street in October; all the non-election is doing is making sure they don't go away.

And if this goes on? These are uncharted waters for the markets, too, but a reasonable guess is that Wall Street can go on worrying primarily about its own problems for a while. The markets love gridlock, and for a while the Endless Election only confirms that next year, Washington will be seized with it. But if the thing takes another turn, one that starts to touch seriously on faithless electors and President Dennis Hastert, it will get ugly.

There are some minor precipices already in sight. After the selling picked up speed heading into the bell, the NASDAQ closed down 171 points to 3028 by midafternoon, is rubbing right up against the 3000-and-change barrier that technical analysts say is poised to give way. And the Dow, down 231 to 10,602, may soon encounter a similar problem with 10,000.

If NASDAQ falls through and keeps on going, it'll likely be for its own reasons — and a deep, serious correction in the tech sector could be the foundation of a real rally. Except that it's hard to see a real rally taking root without a president-elect. If this drags on, and the markets finally run out of patience, both Al Gore and George W. Bush will deserve some responsibility.