New York The prospect of a tight race for the presidency -- and a repeat of the 2000 court battle -- led to a late selloff on Wall Street Tuesday, with stocks finishing the session mixed despite a fresh drop in oil prices.
News of exit polls showing a tight race were a "sell" signal to investors worried that the election would be deadlocked. Most analysts agreed that a clear winner by this morning -- no matter which candidate -- would boost the market. But if the election appeared headed for a prolonged court battle as in 2000, stocks could fall sharply.
"The worst thing that could happen is a contested election, because you'll see this bull run we've had over the past five or six days dissipate," said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. "If somebody can declare victory, then this bull run could extend right through to the end of the year."
The uncertainty kept investors from enjoying another drop in oil prices, taking the price of crude below the $50 per barrel mark for the first time in a month. A barrel of light crude for December delivery closed at $49.62, down 51 cents, on the New York Mercantile Exchange -- the lowest settlement price since Oct. 4.
The Dow Jones industrial average was down 18.66, or 0.2 percent, at 10,035.73. The Dow ended a streak of gains that had added 303.93, or 3.1 percent, to the index since last Tuesday.
Trading volume was higher than expected throughout the session, as early confidence in a quick victory was wiped out by signs that it would indeed be a close contest. In 2000, the markets endured their worst post-election November since Harry Truman's upset victory in 1948.
"I think there's some money just waiting to come in once we have a winner in the election," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "The uncertainty of 2000 is certainly hanging over the market, and we're hoping we don't get a repeat. If we don't, then we have a strong positive bias and a very healthy technical market."