Markets reopen, then tumble

Wall Street goes back to work after trade center attack

Dow has largest point loss

Investors nervous despite 1/2 -point cut in rates by Fed

Terrorism Strikes America

Business Impact

September 18, 2001|By Robert Little and Bill Atkinson | Robert Little and Bill Atkinson,SUN STAFF

NEW YORK - Capitalism emerged from the rubble of lower Manhattan yesterday. But the markets, open for the first time since last week's terrorist attacks, plunged immediately, sending the Dow Jones industrial average down more than 680 points, or 7.13 percent.

"We knew it was going to be a tough day and it was a tough day, but it was orderly," said Andy Brooks, head equity trader at T. Rowe Price Group Inc., the Baltimore-based mutual fund company.

"Systems worked, and, frankly, considering the trauma and tragedy, Wall Street really distinguished itself," he said.

With flags on their lapels and the dust of a shattered city on their shoes, traders returned to the New York Stock Exchange after their longest break since the Great Depression.

They paid homage to the dead with two minutes of silence, then sprang into a record-setting blur of buying and selling.

"We have served notice on the criminals that they have failed," said Richard A. Grasso, chairman of the exchange. "Today, America goes back to business, and its economic system is intact."

Politicians and financiers hailed the event as a return to normality, though little seemed normal inside the darkened, stench-filled canyons of New York's financial district.

Dogs and military vehicles patrolled Wall Street, which, despite a hose-down from firefighters the night before, was still caked with the powdered remains of the World Trade Center towers five blocks away.

The entire southern tip of Manhattan was open only to pedestrians, many of them wearing dust masks.

For the first few hours of trading, police and National Guard checkpoints created a two-block perimeter around the exchange, denying entry to anyone without proper identification and a reason to be there.

Yesterday was not a normal day on the trading floor, either. Despite the government's efforts to calm investors and buoy the market, including an early morning interest rate cut from the Federal Reserve Board, stocks plunged the moment that opening ceremonies ended.

The Dow Jones industrial average suffered its single biggest point loss, falling 684.81 points, to close at 8,920.70. It was the first time since Dec. 21, 1998, when the closing figure was 8,988.85, that the average closed below 9,000.

Other indexes fared littler better. The Nasdaq, which tracks technology stocks, slid 115.83 points, or 6.83 percent, to close at 1,579.55.

The Standard & Poor's 500, a broader measure of the market, fell 53.77 points, or 4.92 percent, to close at 1,038.77.

A record of more than 2.36 billion shares exchanged hands on the New York Stock Exchange.

Many money managers, traders and analysts expected the big drop.

"Our initial reaction is it could have been a lot worse ... ," said David Donabedian, a portfolio manager at Pell Rudman Trust Co., a Boston-based investment counseling firm. "Our expectation was that the market would open down 5 to 10 percent and then stabilize. The key point is the market did open, there were buyers, there were sellers and business is getting done."

Shocking magnitude

Still, some were shocked by the extent of the market's loss.

"I did not expect a decline of this magnitude," said Hugh Johnson, chief investment officer at First Albany Corp. "When you see a financial panic of this magnitude, you cannot help to be somewhat scared. It is a ... frightening period."

Despite the declines, the collection of government and market officials amassed for yesterday's event refused to be discouraged. New York Mayor Rudolph W. Giuliani, who referred to the Sept. 11 attack as "the worst day in our history," called the opening of the exchange a victory over the terrorists who destroyed the city's two most conspicuous symbols of commerce, killing thousands.

"Not only is this not going to destroy our economy, our economy is going to get even stronger and it's going to lead the world through the next century," Giuliani said. "The American people are united as never before."

With taxis banned from the streets and the nearby subway stations still closed, every employee in the financial district yesterday entered on foot.

Rivers of workers began filling in Lower Manhattan by 7 a.m., twisting through narrow corridors of sawhorses and riot fencing.

In the blocks closest to Wall Street, workers crowded every barricade to gape at the skeletons of the World Trade Center visible around the corners in the distance. The cranes and dump trucks rumbled in the background all day; smoke filled the streets only in the morning.

When the twin towers collapsed last week, the shock wave shook Wall Street so hard that many traders scrambled out into the streets.

Yesterday was a reunion of sorts for many, who were uncertain whether friends had lived or died.

"I know a lot of people didn't want to come back - ever," said Todd Rowohlt, a trading assistant for Goldman Sachs Group Inc. "But there's also some comfort knowing that things are back the way they should be. Stocks are trading again. They couldn't stop that."

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