Uncertainty reigns as Wall Street tumbles

Associated Press

NEW YORK — Wall Street hastened its retreat from the economic damage of last week’s terrorist attacks, sending stocks tumbling Thursday in their third steep decline in four days. "It’s roller-coastering down," said Matt Brown, head of equity management at Wilmington Trust.

The Dow dropped nearly 383 points, closing below 8,400 for the first time since October 1998.

And unless the blue chips rally substantially Friday, they are likely to have their biggest one-week point drop, eclipsing the 821.21 they fell in the week ending March 16. As of now, the Dow’s percentage loss for the week is its ninth largest.

The broader market also skidded lower Thursday, with the Nasdaq composite index falling 56.87, or 3.7 percent, to 1,470.93 and the Standard &Poor’s 500 index off 31.56, or 3.1 percent, at 984.54.

This is the first time the S&P 500, considered the market’s best indicator, has closed below 1,000 since October 1998.

"The economy was in bad shape before this event, and this event just magnified everything by thousands," said Gary Kaltbaum, market technician for Investors’ Edge Partners, of last week’s terrorist attacks.

Uncertainty weighed heavy on Wall Street, where analysts and investors wondered just how much and for how long the economy will suffer as a result of the Sept. 11 attacks, and anxiously awaited to see how the Bush administration will retaliate.

"We just don’t know the answers," said Ricky Harrington, a technical analyst for Wachovia Securities.

That sentiment was echoed throughout the market. Jon Brorson, director of equities at Northern Trust, said, "We just don’t know, and that’s the thing."

And, Kaltbaum said: "Nobody has a clue what tomorrow morning will bring. And when there is so much uncertainty, people don’t want their money at risk."

The intense selling was expected after a turbulent session Wednesday, when the Dow fell more than 400 points before recovering to a loss of 144. The market is expected to remain quite vulnerable as companies announce layoffs and profit warnings linked to the attacks in which hijacked airliners leveled the World Trade Center and destroyed part of the Pentagon.

Signs of economic fallout have already appeared as U.S. airlines reduced their flight schedules and cut thousands of jobs, and as insurance companies have warned that massive payouts will hamper the industry for quite a while.

Likewise, financial companies have warned they will suffer as consumers and investors spend, borrow and invest less. Retailers and those in the entertainment industry also expect a drop in business.

Analysts said some technical factors are also at work in the market.

They said investors might be receiving margin calls — a demand that they repay money borrowed to buy stocks earlier. Another factor is the expiration of index futures and index and stock options Friday, a quarterly occurrence called triple witching, which can prompt heavy selling.