NEW YORK (CNNfn) - U.S. stocks plunged to their lowest levels in nearly three years Monday, and the Dow Jones industrial average suffered its worst point-loss in history as trading resumed for the first time following last week's terrorist attacks. |
Big losses in aircraft maker Boeing and aviation parts supplier United Technologies helped send the Dow down 684 points or over 7 percent. That loss, while severe, doesn't make the index's top 10 worst declines in percentage terms.
The Dow suffered its worst loss percentage-wise on "Black Monday" Oct. 19, 1987 when the blue-chip index dropped 22.6 percent.
Losses in insurance companies facing damage claims helped send the Standard & Poor's 500 index to its worst finish since October 1998.
The Nasdaq composite index also tumbled and now stands 68 percent off its all time high. But the Dow posted the biggest loss of the day, 7.1 percent. The blue chips now stand 24 percent below last year's record high, putting the Dow in the grip of the bear market that has held other indexes for months.
As investors returned from the longest trading halt since the Great Depression, volume surged to record levels. But the selling was orderly at the New York Stock Exchange, where circuit breakers – mechanisms that temporarily halt trading - never kicked in.
"The question is, 'How long will it take to rebuild confidence?'" said Angel Mata, head of equity trading at Legg Mason. The losses were worse than he expected, Mata said.
While stocks often recover from catastrophes, he asked, "What if there's a second wave (of terrorism)?"
Market watchers cast the lack of panic as a victory, six days after hijackers tried to cripple the world's financial capital by crashing jetliners into the World Trade Center's twin towers.
"The bad guys lost, the good guys won," Michael Holland, chairman of Holland & Co, told CNNfn's Street Sweep.
Alex Maio with Prudential Securities, puts up an American flag on the New York Stock Exchange trading floor prior to the opening bell.|
The market may have gotten some help from the Federal Reserve, which cut interest rates for the eighth time this year. Regulators at the Securities and Exchange Commission made it easier for companies to buy back their own shares. And individual investors, citing patriotism, urged one another to buy stocks.
Defense, mining and some drug stocks rose. But that couldn't keep the Dow industrials from falling 684.81 points to 8,920.70, surpassing the 617.78 point drop in April, 2000 that was the record.
The Nasdaq composite index fell 115.75, or 6.8 percent, to 1,579.55, while the Standard & Poor's 500 index shed 53.81, or nearly 4.9 percent to 1,038.77.
The losses handed all three indexes their lowest closes since the autumn of 1998, the start of a historic run for stocks that is now long over.
On the NYSE, declining stocks led advancing ones by a 5-to-1 margin. More than 2.3 billion shares traded, the busiest day on record. Nasdaq losers led gains by a 4-to-1 edge as 2.2 billion shares changed hands.
Overseas, Asia's stock markets tumbled while Europe's stabilized. Treasury securities fell after rallying last week. The dollar finished little changed against the euro and yen.
Few sectors spared
No industry took it harder than airlines, with Continental (CAL: down $19.59 to $20.05, Research, Estimates) , US Airways (U: down $6.05 to $5.57, Research, Estimates), AMR (AMR: down $11.70 to $18.00, Research, Estimates), the parent of American, and Delta Air Lines (DAL: down $16.61 to $20.64, Research, Estimates) sharply lower. Weakness in airline stocks sent the Dow Jones transportation average 15 percent lower.
Big slides in United Technologies (UTX: down $18.70 to $47.50, Research, Estimates) and Boeing (BA: down $7.66 to $35.80, Research, Estimates), which supply the airlines with planes and parts, hit on the Dow industrials.
Analysts expect major losses for the already troubled airline business, which has lost about a week's worth of sales since Tuesday and may have trouble attracting flight-wary travelers.
American International Group (AIG: down $3.26 to $71.00, Research, Estimates), the biggest insurer, fell along with the world's most valuable company, General Electric (GE: down $4.20 to $35.15, Research, Estimates).
Insurers face tens of billions of dollars in claims from the attacks on the World Trade Center and Pentagon.
Click here for a detailed look at how sectors fared
Citigroup (C: down $2.85 to $39.60, Research, Estimates) provided early clues into the disruption when it warned that third-quarter profit would fall short because of life insurance claims and the closing of the stock exchange and many of its branches.
But the day held positives. The Federal Reserve's latest rate cut took the overnight lending rate between banks to its lowest level since early 1994. Hours later, the European Central Bank made a surprise, half-percentage point rate cut of its own.
Encouraged by the Securities and Exchange Commission, Intel (INTC: down $2.48 to $23.59, Research, Estimates), Starbucks (SBUX: down $0.94 to $15.51, Research, Estimates) and Sanmina (SANM: down $1.98 to $12.59, Research, Estimates) joined a growing list of companies saying they will buy back their own shares.
It was an emotional start at the NYSE, which observed two minutes of silence before trading began. Members of the New York City fire and police departments, along with other emergency personnel, rang the opening bell blocks from the site of the still-smoldering former World Trade Center.
NYSE traders observe a moment of silence.|
Floor brokers and specialists went on to sing "God Bless America" before a reopening heavy in symbolism.
"They (the terrorists) have lost," New York Stocks exchange Chairman Richard Grasso said.
Warren Buffett, whose Berkshire Hathaway owns the reinsurer General Re, told CBS' "60 Minutes" that he would not sell any of his stocks when the market reopens. Meanwhile, individual investors e-mailed one another about buying stocks out of patriotism.
"Sir, the world is watching Wall Street," wrote Roger Brooks, a CNNfn.com reader. "Show these evil people what you're made of. Buy, buy, buy."
But that sentiment didn't stop analysts from lowering their earnings targets. Bank of America and J.P. Morgan Chase both cut their S&P 500 profit outlooks Monday.
Even without Tuesday's attack, investors had reason for wariness. Consumer sentiment tumbled last week while jobless claims surged. Industrial production fell for an 11th straight month in August, a month when the unemployment rate jumped to a four-year high.
Still, some stocks rose, including defense contractors Raytheon (RTN: up $6.65 to $31.50, Research, Estimates) and Northrop Grumman (NOC: up $12.86 to $94.80, Research, Estimates). Mining companies Glamis Gold (GLG: up $0.59 to $3.80, Research, Estimates) and Meridian Gold (MDG: up $0.96 to $10.89, Research, Estimates) also gained as money chased stocks that often hold up during selloffs.
Merck (MRK: up $1.05 to $67.15, Research, Estimates) and Johnson & Johnson were among the few advancers among the Dow industrials.
And InVision Technologies (INVN: up $5.14 to $8.25, Research, Estimates), which makes technology for detecting explosives, rallied as much as 276 percent.
The day before the Jewish New Year, Rosh Hashanah, is normally a quiet trading day. But little was normal about Monday. Looking ahead, some saw encouragement in the day's close, with the major indexes finishing above the worst levels of the day.
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