US stocks down on polling day

The prospect of a tight race for the presidency – and a repeat of the 2000 court battle – prompted a late selloff on Wall Street tonight, 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 tomorrow 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 SW 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. A barrel of light crude for December delivery closed at 49.62, down 51 cents, on the New York Mercantile Exchange.

The Dow Jones industrial average was down 18.66, or 0.2%, at 10,035.73. The Dow ended a five-day streak of gains that had added 303.93, or 3.1%, to the index since last Tuesday.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was up 0.07, or 0.01%, at 1,130.58, and the Nasdaq composite index gained 4.92, or 0.2%, to 1,984.79.

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.

“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.”

Emerson Electric gained 1.25 to 65.53 as the diversified manufacturer saw its net income jump 28%. The company beat Wall Street profit forecasts by 5 cents per share.

National Semiconductor lowered its profit forecasts for the current quarter, citing sluggish sales and high inventories, much as Intel had done in September with its mid-quarter report. National Semi tumbled 29 cents to 16.40, while Intel climbed 17 cents to 22.61.

Consumer products maker Clorox fell 1.38 to 53.77 after reporting that its first-quarter earnings fell 5% due to one-time charges stemming from a restructuring effort. The company still beat analysts’ expectations by 3 cents per share.

Insurance stocks were mixed as Merrill Lynch downgraded Aon and Willis Group Holdings in response to New York Attorney General Eliot Spitzer’s investigations of the two companies. Aon lost 19 cents to 20.46 while Willis added 4 cents to 36.

Media reports said Time Warner’s struggling America Online unit would lay off 700 workers as the online service worked to stem a tide of subscriber defections. Time Warner was down 10 cents at 16.28 on the news.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index of smaller companies was down 1.58, or 0.3%, at 585.42.