Stocks dip as Wall Street resumes trading

Associated Press

NEW YORK – Selling swept Wall Street as the stock market reopened Monday, sending the Dow Jones industrials down as much as 600 points and below 9,000 for the first time in 2 1/2 years.

The Nasdaq and other major indexes also posted big declines in selling that was widely expected as the market traded for the first time since last week’s terrorist attacks.

“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.”

In late morning trading, the Dow fell 520.67, or 5.4 percent, to 9,084.84, having recovered some ground from a 629-point plunge in the first hour. The early drop pulled the Dow below 9,000 for the first time since December 1998. The Dow was also well below its lowest close of the year – 9,389.48 on March 22.

Nearly all of its 30 components posted big losses. Boeing fell $7.81 to $35.65, and United Technologies tumbled $10.09 to $56.11.

The broader market also suffered with the Nasdaq falling 83.61, or nearly 5 percent, to 1,611.69, a level not seen since October 1998.

The Standard &Poor’s 500 index, the broadest measure of Wall Street, declined 44.78, or 4.1 percent, to 1,047.76.

All of Monday’s session promised to be extremely busy with heavy trading volume and significant volatility. There was also a great deal of news for investors to sort out, including a half-point interest rate reduction – the eighth cut this year – made by the Federal Reserve before the market reopened, along with a litany of companies announcing stock buybacks to boost their share prices.

Analysts said 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.

But the 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 time to separate their emotions from their investments, analysts said.

Most of Wall Street’s biggest losses came from sectors, such as airlines and insurance, that stand to suffer the greatest in the wake of the attacks.

UAL, the parent of United Airlines, fell 41 percent, down $12.63 at $18.19, and AMR, the parent of American Airlines, plunged $11.70, or 39 percent, to $18. Both companies, whose planes were hijacked and flown into the World Trade Center’s twin towers and the Pentagon, announced they will reduce their flight schedules by 20 percent.

Insurer American International Group fell $3.72 to $70.52.

Financial companies also traded lower on the expectation that investors and consumers will invest, spend and borrow less. Dow industrial American Express sank $5.28 to $29.73, while Merrill Lynch fell $3.35 to $43.50.

Entertainment stocks were also weak as investors expect business to suffer if the weakened economy goes into recession. Disney, also a Dow stock, fell $3.42 to $20.16.

But there were some winners, chiefly in defense, which could see a big uptick in government spending. Defense contractor Lockheed Martin rose $5 to $43.32.

Following the devastation that wrecked Wall Street, the NYSE and the Nasdaq this past weekend tested their trading systems and those of their member firms to ensure they were operating properly and would be able to process trades. It was not immediately known if there were any trading glitches that prevented investment firms from executing trades.

There were to be no constraints on trading with limit orders being processed as well as short sales, thos in which traders make money by betting that the market falls, said NYSE chairman Richard A. Grasso. However, analysts said they expected few short sellers on Wall Street, calling that strategy inappropriate given the gravity of the attacks and thousands of lives lost.

In a move to support the market, the Securities and Exchange Commission on Friday eased rules governing stock buybacks by companies. Several companies have announced plans to repurchase their stock as a signal of their confidence in their own shares, as well as the market and the country.

Companies that announced plans to repurchase their shares include networker Cisco Systems, which fell 48 cents to $13.99, and Starbucks, down 66 cents at $15.79.

Declining issues outnumbered advancers nearly 7 to 1 on the New York Stock Exchange. Volume came to 779.50 million shares, up from the 392.97 million that were traded at the same point Monday.

The Russell 2000 index, the barometer of smaller company stocks, fell 15.29 to 424.07.

Overseas markets were mixed Monday. Japan’s Nikkei stock, which had closed before the U.S. markets reopened, average tumbled 5 percent. European stocks rose strongly in afternoon trading. Germany’s DAX index was up 2.6 percent, while France’s CAC-40 rose 1.9 percent and Britain’s FT-SE 100 was up 2.2 percent.

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com