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Wednesday, 13 December, 2000, 22:21 GMT
Markets ready for Bush win
Al Gore
Vice-president Gore is expected to concede the election
The prospect of an end to the five-week legal fight for the US presidency prompted an early stock market rally on Wednesday, but investors' enthusiasm was short lived.

A ruling by the US Supreme Court late on Tuesday appeared to dash the presidential hopes of the Democratic candidate, Vice President Al Gore.

Maybe the bigger picture for is that the market's already priced in the Bush win

Investment strategist Barry Hyman
Democratic sources said Gore is planning to announce the end of his campaign at 9pm eastern standard time (0200 GMT) on Wednesday, allowing Republican George W Bush to claim the White House.

Stocks shot higher as markets opened, but the gains faded through the trading day, amid concerns over growth prospects in the technology sector.

Bush win already factored in

The technology-heavy Nasdaq Index dropped 108.96 points, or 3.72%, to close at 2,822.81.

Earlier on Wednesday, the Nasdaq had gained 70 points to 3,001.7, then finished near the low of the day.

The Dow Jones Industrial average managed to post a modest gain of 26.17 points, or 0.24%, to 10,794.44, while the benchmark Standard & Poor's 500 index shed 11.19 points, or 0.82%, to close at 1,359.99.

The Dow had jumped nearly 150 points in early trade.

It managed to finished in the black on the back of gains by tobacco giant Philip Morris, seen as a key pro-Bush stock, JP Morgan bank and aluminium giant Alcoa.

"Maybe the bigger picture for is that the market's already priced in the Bush win, and you're seeing earnings taking centre stage again," said Weatherly Securities chief investment strategist Barry Hyman.

"We've been ignoring these downgrades, and today we're not ignoring them."

European markets

European share markets were also unmoved by the US Supreme court decision - despite forecasts that a Bush victory would boost stocks.

Investors fretted instead about warnings of poor profits from US firms, including the world's biggest computer maker Compaq.

"The markets hate uncertainty, so the fact that Bush will probably be elected should have improved the climate," said a sales director at a major French bank.

"But other factors came into play, notably profit warnings from big US technology firms."

London's FTSE 100 index edged up just 12.6 points to close at 6,403.0.

Paris' CAC-40 index dropped 85.37 points, or 1.4%, to finish at 5,962.29.

In evening trade, Frankfurt's DAX was at 6,612.31, down 121.28 points or 1.8%.

Microsoft downgrade

On Wall Street, Microsoft was hit by a downgrade from investment house Prudential Securities.

Earlier, the stock was up on hopes that Bush will have a more relaxed approach to the antitrust issues plaguing the software giant.

But, in general, traders were more concerned about a report showing a surprise dip in US retail sales in November.

This raised expectations for a near-term cut in interest rates by the US central bank.

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See also:

13 Dec 00 | Americas
Gore poised to quit
12 Dec 00 | Business
Election hopes boost tech shares
12 Dec 00 | Americas
Judges sleep on US vote ruling
08 Dec 00 | Business
Florida ruling upsets markets
07 Dec 00 | Business
Motorola warns on profits
08 Dec 00 | Americas
Gore wins crucial court victory
05 Dec 00 | Business
Blue chip index sheds tech stocks
05 Dec 00 | Americas
Analysis: The legal battles
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