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Markets & Stocks
Attack worries markets
September 11, 2001: 3:13 p.m. ET

Catastrophe comes during sensitive time for economy and Wall St.
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The terrorist attack on Wall Street and Washington has unnerved investors already enduring the first bear market in a decade. But the duration of any market sell-off is clouded with questions over how the destruction will affect the fragile economy and psychology.

U.S. markets never opened Tuesday, but those overseas went into freefall, with European stocks tumbling and oil prices surging. The dollar fell as money flooded into gold and Treasury bonds, traditional havens amid uncertainty.

"The immediate economic implications are not good," said Marc Chandler, chief currency strategist at HSBC, who said the attack makes it more likely that the U.S. Federal Reserve will cut interest rates before its regular meeting next month.

Insurance companies may face pressure amid possible billions of dollars of property and life claims. The services sector could run into difficulty, depending on how much travel and shipping are disrupted. And it remains to be seen how airlines, defense companies and oil producers could be affected.

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"This is a major, major act of war and act of terrorism that will have widespread economic consequences," said Jeremy Siegel, professor of finance at the Wharton School of Business, who called the immediate market panic unsurprising given the event.

The attack comes at a fragile time for the economy, which posted almost no growth last spring despite a series of interest rate cuts by the Federal Reserve.

The confidence of consumers and businesses, a wild card, will surely influence spending and investing in a world seen as a little less stable and secure.

"It's a watershed of an event," Siegel said.

Though U.S. markets were closed Tuesday, stock futures, which trade before the open, fell as the attack played out on television screens. It was not immediately clear if U.S. markets would open Wednesday and what affect the attack would have on brokerages like Goldman Sachs, Lehman Brothers and Merrill Lynch, which are located within blocks of the destroyed World Trade Center.

State Farm Insurance and American International Group (AIG: Research, Estimates), the biggest U.S insurers, may be active when trading begins. That's also the case with defense contractors Boeing (BA: Research, Estimates), United Technologies (UTX: unchanged at $66.20, Research, Estimates) and Lockheed Martin (LMT: Research, Estimates) .

In a statement from Washington, the Fed said it is making money available to banks in the wake of the terrorist attacks.

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The promise to supply additional money was similar to a pledge the Fed made the morning after the October 1987 stock market crash, when the Dow industrials plunged more than 500 points in one day.

"This may be what throws us into recession," said Maureen Allyn of

Zurich Scudder Investments, who predicts higher oil prices and that worries over travel safety will slow tourism and business travel.

Central bankers cut interest rates seven times this year and were expected to do so again next month.

With the price of oil surging, investors will watch the impact on Exxon-Mobil (XOM: Research, Estimates). Airline stocks fell overseas and could be active when trading resumes here.

In the attack, four hijacked commercial airliners crashed. Two hit the World Trade Center, another hit the Pentagon and a third crashed in Pennsylvania.

The worst act of terrorism against the U.S. could affect consumer confidence, which is likely to have taken a hit already after the government Friday said the nation's unemployment rate rose to 4.9 percent.

When U.S. stocks open, they'll begin the session at depressed levels. The Standard & Poor's 500 index closed down more than 17.2 percent on the year Monday while the Nasdaq was 31 percent lower in 2001. Blue chips have held up a little better. The Dow industrial are off 11 percent on the year. graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.