Monday: A day unlike any other

By FLOYD NORRIS, New York Times

© St. Petersburg Times,
published September 18, 2001

NEW YORK -- Never before has a day in which the stock market tumbled 5 percent seemed like a good day. But Monday was a day unlike any other.

The losses were smaller than many had expected, and they reflected a surge of buying by ordinary Americans who were evidently convinced that it was patriotic to be bullish.

The Standard & Poor's 500, the best representative of the substantial companies that make up the economic might of the United States, finished the day down 4.9 percent, at 1,038.77, its lowest level in nearly three years.

On any other day, that would be a horrendous performance. But this day was unlike others in so many ways. Since the planes struck the World Trade Center, no major stock market in the world, except in Britain, has fallen so little.

That the market did as well as it did is testament that the pleas to Americans to buy stock as a patriotic, anti-terrorist gesture had borne fruit. In the morning, it appears there was a wave of such orders, which helped to sustain prices.

That buying faded, though, and in the afternoon it appeared that individuals were about as likely to be sellers as buyers.

The high point of the recovery, whether by coincidence or not, came within a few minutes of the first report that President Bush wanted to capture Osama bin Laden "dead or alive." If nothing else, that provided a sobering reminder of the possibility that more rounds of violence may lie ahead.

The Nasdaq composite and the Dow Jones Industrial Average did not do as well as the S&P, for divergent reasons. The Dow has a number of companies that were hard hit by the news, such as United Technologies and Boeing, which will be hurt by a fall in commercial jet orders, and Disney, which is heavily dependent on tourism. As for the Nasdaq, some of its big technology companies also performed poorly, perhaps reflecting that they still trade at substantial profit multiples that reflect a time when growth seemed limitless. That time was little more than a year ago, but in the current atmosphere its return seems unlikely.

Still, both the Dow and the Nasdaq fell about 7 percent, which is better than all but a few world markets have done since the attack.

One milestone that was reached, which got far less attention that it would have on any other day, was that the Dow became the last major American index to fall more than 20 percent from its peak. That is a traditional indication of a bear market, but by now no one needs statistical proof that a bear is loose in nearly all the financial markets of the world.

Those who hope for a bottom in the market, however, may take hope from the fact that the past two bear markets -- in 1987 and 1990 -- hit bottom on the very day the Dow first closed more than 20 percent below its peak. And the 1990 low came amid recession and fears of a bloody war, that one against Iraq.

For many on Wall Street, the market's performance was almost a secondary consideration. Simply resuming trading, with some companies using improvised trading systems and with many financial industry employees back in lower Manhattan for the first time since Tuesday, was to be celebrated.

The people doing the trading felt the range of emotions. It was comforting to be back at work on Wall Street, doing what they were used to doing and away from television sets. But there was also something unsettling about trying to make money at a time when so many friends and colleagues were dead. It was not, could not, be a normal day.

When things do get more normal, when people such as New York state Controller Carl McCall are not issuing news releases proclaiming that they are buying stocks, it is possible that share prices will come under more pressure. As it is, a look at world stock markets would make it appear that the United States economy is likely to be among the least affected by this crisis, a thesis that seems unlikely.

American economic statistics that have come out since the attack have gotten little attention, but they have been depressing.

There were hopes that the economy had hit bottom, but a new surge in unemployment claims, another fall in industrial production and a drop in consumer confidence -- all predating the attack but reported after it -- indicate that those hopes were being dashed.

There is a good chance that a recession had begun well before the World Trade Center was struck, and it is hard to imagine that it will not be deeper now. But perhaps it will be shorter, as the willingness of the government to spend money -- without the sterile arguments about a Social Security lockbox -- provides a needed economic stimulus.

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