US stocks reversed course suddenly yesterday and drifted lower as chatter on the internet speculated that early exit polls had Senator John Kerry leading the presidential election in key swing states.

The Dow Jones industrial average was down 42 points, or 0.42 per cent, at 10,012. Other indices were also fractionally off.

The Dow Jones and S&P 500 had been higher for most of the session, heading for a sixth straight day of gains, on falling oil prices and growing certainty that there would be a clear winner to the US presidential poll. But it turned south sharply just after lunch on the exit poll speculation.

"What we are hearing is that there is some feedback coming back from Ohio, that there could be a closer outcome out there or John Kerry could even potentially win that state," said Mr Evan Olsen, head of equity trading at Stephens.

Turnout was unusually high as Americans voted to decide whether Republican incumbent President George W. Bush or Mr Kerry, his Democrat rival, would be the next US president.

The price of US crude held near $50 (€39.28), slipping under that mark for the second day in a row during intraday trade, after spending most of October above that price.

NYMEX December crude was down 51 cents at $49.62 a barrel. Just four days ago, crude was trading close to $56 per barrel.

A Kerry victory could affect defence and healthcare stocks, said Mr John O'Donoghue, managing director of listed trading at CSFB.

General Dynamics fell $2.19, or 2 per cent, to $100.15. The company was seen as a Bush stock since it makes hardware like military vehicles and ships. It was the biggest percentage decliner in the S&P defence index.

The tech-heavy Nasdaq composite index had been up more than 1 per cent, while the blue-chip Dow Jones industrial average and the broader benchmark Standard & Poor's 500 index were up at least 0.6 per cent when markets dived in late afternoon trading. The Dow lost about 60 points in 18 minutes.

Traders said that part of the slide was due to internet blogs indicating that Kerry was ahead in key swing states.

"That's what we're hearing," said Ms Lisa Hansen, head trader at Transamerica Investment Management. "Apparently the blogs are saying that Kerry is ahead in one or two of the swing states and that's why the market dipped."

Mr Keith Keenan, vice-president of institutional trading at brokerage Wall Street Access, said he'd heard vague rumours that early exit polls out of Ohio and Florida favoured Mr Kerry.