Tuesday, September 18, 2001

Many stockholders sell as Wall Street resumes trading
By Amy Baldwin
Associated Press

NEW YORK — The losers included airline, insurance and entertainment stocks while defense issues were among the few winners when Wall Street tumbled Monday, the first day of trading after last week’s terrorist attacks. The selling, in record volume on the New York Stock Exchange, gave the Dow Jones industrials their biggest one-day point drop and left them below 9,000.

“To buy stocks you need some kind of clarity and confidence, and right now you’ve got neither,” said Bill Barker, investment consultant at Dain Rauscher in Dallas. “The buying public is sitting on its hands. The sellers are obviously in control now, but it’s difficult to tell how long that will last.”

Analysts were unsure how long the selling would last or how intense it might become.

Following last week’s attacks, investors have more reason to worry about shrinking profits, not to mention the nation’s security.

Still, analysts, who said Monday’s selling could have been worse, said there are several reasons, including deeply discounted stock prices and patriotism, to hope for a rally.

“There could be some patriotic buying. ... I have heard brokers say their clients are saying, ‘I want to buy something to show my support in our economic systems,’” said Larry Wachtel, market analyst at Prudential Securities.

The Dow ended down 684.81, or 7.1 percent, at 8,920.70, according to preliminary calculations, surpassing the previous record one-day point drop of 617.78, set on April 14, 2000. The last time the blue chips were below 9,000 was Dec. 3, 1998.

The Dow also set a record for an intraday point decline, 721.56 beating the previous record of 721.32, also set on April 14, 2000.

By percentage, however, the Dow’s loss was less severe, ranking 14th and equaling less than a third of the biggest-ever percentage drop of 22.6 percent in the crash of Oct. 19, 1987.

The Nasdaq composite index finished Monday down 116.02, or 6.8 percent, at 1,579.28, a level not seen since Oct. 14, 1998 when it closed at 1,540.97.

The Standard & Poor’s 500 index, the broadest measure of Wall Street, declined 53.75, or 4.9 percent, to 1,038.79.

Trading was extremely busy, evidenced by the NYSE’s volume, which reached 1 billion by noon — three hours earlier than usual. But the selling could have been even stronger, something that was apparent in the number of stocks that fell versus those that advanced. The ratio of decliners to advancers was close to 6 to 1, typical of the Wall Street’s recent selloffs.

Investors had to digest a great deal of news Monday, including a half-point interest rate reduction — the eighth cut this year — by the Federal Reserve before the market reopened, along with a litany of companies announcing stock buybacks to boost their share prices.

Analysts said U.S. investors were ready to get back to trading, anxious to adjust their portfolios amid the uncertainty about the market, the economy and the overall market.
The stock market's closure, necessary as damaged utility services were restored and investment firms scrambled to find alternate places to do business, was also needed to give investors some time to separate their emotions from their investments, analysts said.

“There has been a four-day hiatus, which takes a little bit of the panic out of it. ...Of course, the Fed cutting rates, while it wasn’t unexpected, it was helpful,” Wachtel said. “It’s not going to be a disaster.”