Which way leads up?
The terrorist attacks, the corporate scandals, the sluggish economy ... they've all combined to make investors wonder...
September 8, 2002
Wasn't it terrorism that was supposed to do in the stock market? At least that's what most investors thought after the Sept. 11 attacks. Little did anyone know what was ahead.
A year ago, who would have thought that an insider-trading scandal would plague Martha Stewart or that some former Wall Street darlings like WorldCom and Enron would crumble under accounting scandals?
And then there's the economy, which was revving up nicely last winter but unexpectedly slipped back again this summer.
The terrorist attacks set off a bad year on Wall Street, but it wasn't the only thing on investors' minds.
When Sept. 11 hit, already jittery investors were thrust into a full-fledged panic.
For months before, the market had been battered by weak earnings, especially in the technology sector, and an economic recession.
Then the attacks came, and the following weeks were filled with incessant talk of doom and gloom.
In the first week of trading after Sept. 11, the Dow Jones industrial average plunged more than 14 percent and other major stock indexes collapsed as well.
But investors' nervousness vanished, almost immediately. A powerfulrally ensued, and by November, indexes were trading at pre-attack levels.
Investors regained confidence, even shrugging off Enron's bankruptcy announcement in December. It seemed as though Wall Street had roundedthe bend.
Enter 2002, a year that will go down in history as one plagued by scandal.
The year's start was almost uneventful, with stocks sticking to a tight trading range. But everything began to unravel by late spring, and by mid-May, the market set off on what became a fierce summer-long selloff that sent the Dow industrials to their lowest level in four years.
Fueling the decline: A decimation of investor trust due to a rash of corporate scandals.
WorldCom executives were led away in handcuffs, charged with hiding expenses and lying to investors. Companies including Kmart filed for Chapter 11 bankruptcy protection, and dozens more, including AOL Time Warner, faced investigation by the SEC.
Even Martha Stewart has been embroiled in an insider-tradng scandal with her selling of shares in drugmaker ImClone Systems.
As if all this wasn't enough, new signs of a teetering economy soured hopes for a quick recovery.
The market managed to regain some of its losses in August, but with the summer's end drawing near, what's ahead is still unclear.
No bad news in recent weeks has boosted investor confidence. But the long list of worries continues to loom over the market.
When will corporate earnings get stronger or the economy pick up steam? Will there be war against Iraq? Will there be another terrorist attack?
Just as it was a year ago, the fear of the unknown is the market's biggest enemy.
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