Stocks fall again but Dow stages partial recovery from 423-point plunge

  • Lisa Singhania / Associated Press
  • Tuesday, September 18, 2001 9:00pm
  • Business

By Lisa Singhania

Associated Press

NEW YORK – Economic fallout from last week’s terrorist attacks sent stocks spiraling for the second time in three days Wednesday. Only a late burst of buying saved the Dow Jones industrials from their worst three-day point loss ever.

The Dow, down 423 points in mid-afternoon, recovered to a loss of 144 following news reports that the Pentagon had ordered fighter and bombers to begin moving to the Persian Gulf area, the first concrete sign of preparations to retaliate for last week’s terrorist attacks.

“I think that’s what the market needed to see, they wanted to get rid of uncertainty and this helped,” said Charles White, porfolio manager at Avatar Associates.

Despite the comeback, the market remained vulnerable after thousands of job cuts at Boeing and other companies following the attacks heightened fears about the already fragile economy.

“The selling pressure is very broad-based – cyclical and defensive stocks, value and growth stocks are all down basically the same amount,” said Tom Galvin, chief investment officer at Credit Suisse First Boston. “If you go back to the 1990 Kuwait invasion, the market fell 15 percent in the first three months and its seems like we want to make that happen faster.”

At its low, the Dow had accumulated a three-day loss of more than 1,100 points. Its worst three-day loss was 984 points in August 1998.

The Dow closed down 144.27, or 1.6 percent, at 8,759.13, according to preliminary calculations. So far this week, the Dow is down 746.81, or 8.8 percent.

Broader indexes also fell. The Nasdaq composite index was down 27.28 at 1,527.80, a 1.8 percent loss, while the Standard &Poor’s 500 index was off 16.64, or 1.6 percent, at 1,016.10.

Wednesday’s trading showed how unpredictable the market is likely to be in the coming days. It had appeared to steady Tuesday after the severe drop Monday, when the Dow fell a record 684 points.

Boeing’s announcement late Tuesday of as many as 30,000 job cuts, as well as predictions of tough times ahead by Eastman Kodak and others, renewed the fears of investors already skittish about the market. Boeing fell 53 cents, or 1.6 percent, to $32.61.

Wall Street had been pushing the market lower all year on worries about when business will improve and, prior to last week’s attack, many analysts had predicted that the worst of the selling might be over soon. But the assaults on the World Trade Center and Pentagon negated those forecasts and raised the possibility the situation may be deteriorating.

The Pentagon on Wednesday ordered fighter and bombers to begin moving to the Persian Gulf area, the first concrete sign of preparations to retaliate for last week’s terrorist attacks.

“It’s very murky as to what our reaction is going to be politically and meanwhile you’re continuing to get major layoff announcements,” said Bill Barker, investment consultant at Dain Rauscher. “The economic uncertainty has heightened considerably over the near-term and there is simply no reason to buy.”

Eastman Kodak slid $2.22, nearly 5.6 percent, to $37.61 after it lowered third-quarter expectations and said more job cuts are inevitable. The world’s largest photography company had announced in April it was cutting 3,500 jobs from a global payroll of 78,400.

“It’s hard to look at headlines of 30,000 layoffs and more and not worry about what the impact is going to be on an economy that is already slowing,” said Charles White, portfolio manager at Avatar Associates. “From a sentiment standpoint, we’re starting to get to levels of despair among investors. It’s easy to just sit and your desk and be miserable and morose on news like this.”

Tech stocks also took a hit, particularly in the semiconductor category. Intel fell $1.19 to $22.28, a 5 percent drop.

“I think market overall is bracing for higher unemployment,” said Robert Streed, portfolio manager of Northern Select Equity Fund, who expects the markets to flounder for about a week before making any real progress.

Among the few winners Wednesday: telecommunications firm Verizon, which rose $2.20 to $53.90.

Also Wednesday, the market contended with another sign of economic fragility. The Commerce Department reported that the U.S. trade deficit narrowed slightly to $28.8 billion in July as a big drop in imports of cars, oil and other foreign products offset the biggest fall in U.S. exports on record. The decline was a reflection of widespread weakness domestically and overseas.

The Pentagon ordered combat aircraft to bases in the Persian Gulf region on Wednesday, but much of the details about how the United States will respond to the terrorist attack remain murky.

Analysts also attributed the losses to technical aspects of trading. They said investors who borrowed money to buy stocks earlier might have been forced to sell some of their portfolio to pay back those loans in what are known as margin calls. Another factor is the expiration of stock futures and options Friday, a quarterly occurrence called triple witching, might be contributing to the downturn.

Finally, Rosh Hashana, the Jewish New Year, was celebrated on Tuesday and some analysts said trading might have been lighter and quieter that session as a result.

Galvin also noted that Tuesday’s respite squares with the market’s history of stop-and-start trading in times of extreme uncertainty.

“I continue to talk to more fund managers that are creating buy lists than sell lists,” he said.

Declining issues led advancers by more than 3 to 1 on the New York Stock Exchange. Volume came to 2.11 billion shares, compared with 1.67 billion Tuesday.

The Russell 2000 index fell 8.46 to 403.20.

Overseas, stocks were mixed. Japan’s Nikkei stock average rose 2.7 percent. In Europe, Germany’s DAX index lost 3.7 percent, Britain’s FT-SE 100 dropped 2.6 percent, and France’s CAC-40 was off 2.0 percent.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.