Investors show resolve
September 12, 2001: 9:56 p.m. ET

Financial markets relatively stable following terrorist attacks
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - U.S. stock markets will stay shuttered for a third day Thursday, but world financial markets as a whole have shown relative stability in spite of the physical devastation in New York's financial district.

Trading of U.S. Treasury and other government securities will resume Thursday, two days after terrorist attacks destroyed the twin towers of the World Trade Center in Manhattan. The Chicago Board of Trade said it will reopen pit and electronic trading on Thursday for all products except equity index contracts. Stock markets in Canada and Argentina will also reopen.

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graphicNew York Stock Exchange Chairman and CEO Richard Grasso said U.S. equity markets will resume trading as early as Friday, but no later than Monday.
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Tokyo's benchmark Nikkei 225 average see-sawed between slight losses and gains in early trading, after the previous day's near-7 percent plunge. European markets had closed higher Wednesday, regaining some of the ground lost on Tuesday.

Officials from the major U.S. stock markets and the government said equity trading could resume as early as Friday and as late as Monday, as they tried to balance concerns over public safety and market liquidity against the need to shore up investor confidence.

"Let us not forget the great tragedy that has befallen this nation," Richard Grasso, chairman and CEO of the New York Stock Exchange, told a Manhattan press conference. Grasso also talked about "restoring the public confidence that this marketplace will be up and functioning."

Officials delayed the announcement, which had been scheduled for 3 p.m. ET, as they hashed out practical matters such as communications and electricity, and the ongoing task of recovering victims from the site of the attack near Wall Street.

Grasso was joined by Hardwick Simmons, chief executive officer of the Nasdaq, Harvey L. Pitt, chairman of the Securities and Exchange Commission, and Peter Fisher, undersecretary at the U.S. Treasury Department.

The resumption of trading is both practical and symbolic. In crashing into the World Trade Center, the hijacked planes destroyed the highest point in New York's financial district and an icon of Wall Street.

Even as the death toll grows, many in the financial community wanted to return to work as a signal that terrorism has not deterred business.

That will happen "by Friday and no later than Monday," Nasdaq's Simmons said.

In spite of the attack, which completely destroyed New York's World Trade Center, most of the world markets were remarkably stable Wednesday.

The trade center and the NYSE are located in densely packed area of lower Manhattan known as the Financial District, home to dozens of investment houses and brokerages. The trade center's twin 110-story towers, which were among the world's tallest skyscrapers and a distinctive part of the city's skyline for decades, collapsed Tuesday after two hijacked jetliners crashed into them, scattering dust and debris throughout the area.

Scores of buildings are damaged in the area around what was the World Trade Center complex, some of them with huge holes that put them at risk of collapsing themselves.

The NYSE is located within an area closed to non-emergency workers, who are searching for victims trapped beneath the rubble. The Nasdaq, electronically traded, is not dependent on personal interaction. That's also the case with trading Treasury securities.

Europe holds firm

While rescue teams continued to pour over the debris in lower Manhattan Wednesday, the shocked world markets began to recover.

But the European markets, which sank late Tuesday after the attack, closed higher Wednesday. At the same time, the dollar rose against other major currencies as markets calmed following the attacks.

Oil and gold prices declined in European trading Wednesday after spiking Tuesday.

The wealthy Group of Seven nations vowed not to let Tuesday's attacks de-stabilize the global economy.

The United States and its allies have pledged that their central banks will coordinate efforts to assure sufficient money is supplied to major banks to prevent disruptions.

The Federal Reserve Wednesday requested that central banks overseas limit the trading of dollars as Chairman Alan Greenspan returned to the United States to help the central bank deal with money supply issues.

Central banks acted swiftly to keep financial markets working.

Meanwhile, OPEC quickly reassured the public that world oil supplies are secure amid concerns of an anticipated U.S. retaliation in the Middle East.

Rumors of gas shortages pushed prices as high as $5 a gallon in some parts of the United States, even as industry representatives assured the marketplace that the country has plenty of fuel on hand.

Rescue workers continue to search for survivors after Tuesday's terrorist attack leveled three buildings at the World Trade Center
Insurance claims from the World Trade Center attack are likely to soar into the billions, easily surpassing the $775 million racked up during the 1992 Los Angeles riots, which until Tuesday was the most costly event not associated with a natural disaster.

Meanwhile, the world's leading investment banks and brokerages said Wednesday they still were trying to account for their New York-based employees after Tuesday's attack.

Brokerages among largest tenants

Morgan Stanley Dean Witter & Co. was the financial complex's largest tenant. The complex also housed offices of brokerage Cantor Fitzgerald on floors 101, 103, 104 and 105 of No. 1 World Trade Center.

Philip Purcell, Morgan Stanley's CEO, said in a taped message to employees Wednesday that most of its employees did evacuate the offices and are safe. Morgan Stanley leased space on about 25 floors of the twin towers.

Many other firms also said they could not confirm whether their employees had been safely evacuated before the towers collapsed.

"Currently, we are unable to determine how many employees were in the building at the time of the attack or confirm if they were safely evacuated," said a spokesman for government securities specialist Cantor Fitzgerald and eSpeed, its electronic trading unit, said.

The companies have set up telephone hot lines for staff and their families and friends.

More than 40,000 people worked in the steel and glass twin towers, and officials feared the death toll could climb into the tens of thousands.

Credit Suisse First Boston, which has offices in a building adjacent to the collapsed towers, which late Wednesday also was in danger of collapse.

The firm, the investment banking arm of Swiss Bank Credit Suisse Group, said its main New York offices on Madison Avenue were not affected by the incident. The company was not immediately available to say how many employees were based in the World Trade Center.

Schroder Salomon Smith Barney said all its employees were evacuated from the towers. But the firm could not account for all staff because many people were on the ground when the towers collapsed, it said.

Merrill Lynch & Co. Inc. said there was limited damage to its building in the nearby World Financial Center.

The U.S. stock markets hadn't been closed for two days since Aug. 16 and 17, 1945, in honor of VJ Day. This will be the longest closing since markets were shuttered for seven days in March 1933, during the Great Depression.

Earlier Wednesday, New York Mayor Rudolph Giuliani told a press conference that he is committed to helping reopen the stock markets, an important part of the city's economy.

The securities business generates more than $100 billion worth of trades every day, according to the Securities Industry Association.

In Washington, the government remained open following a similar attack on the Pentagon. But that act caused far less damage, fatalities and congestion.

The attack, according to some watchers of the Federal Reserve, increased the chances of a interest rate before the Fed's next meeting in October.

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

-- Staff Writer John Chartier contributed to this report