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 midafternoon, recovered to a loss of 144 following reports that the Pentagon had ordered fighters 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, portfolio manager at Avatar Associates.
Despite the comeback, the thousands of job cuts at Boeing, American Airlines and others following the attacks heightened fears about the already fragile economy.
"Our clients are very concerned about the deterioration in their portfolios," said Bill Barker, investment consultant at Dain Rauscher. "There’s no reason to buy as long as the future, both economically and politically, is this uncertain."
The Dow closed down 144.27, or 1.6 percent, at 8,759.13. So far this week, the Dow is down 746.81, or 8.8 percent.
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.
Wednesday’s trading showed how unpredictable the market is likely to be in the coming days. The Dow had appeared to steady Tuesday, falling a mere 17 points, after a record 684-point plunge Monday.
Investors had been pushing stocks lower all year on worries about when business would improve, although before last week’s attack many analysts had predicted that the worst of the economic slump might be over soon. But the assaults on the World Trade Center and Pentagon negated those forecasts and raised the possibility that the economy would deteriorate.
Boeing’s announcement late Tuesday of as many as 30,000 job cuts exacerbated those worries, although the aviation industry was struggling before the attacks. The aircraft maker fell 53 cents, or 1.6 percent, to $32.61.
American Airlines, which announced late in the day that it was cutting at least 10,000 jobs, saw the stock of its parent corporation, AMR, rise 16 cents to finish at $21.16 in after-hours trading after ending the regular session unchanged.
Tech stocks were weaker, too, particularly in the semiconductor category. Intel fell $1.19 to $22.28, a 5 percent drop.
"I think the market overall is bracing for higher unemployment," said Robert Streed, portfolio manager of Northern Select Equity Fund.
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