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.
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. 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.
Eastman Kodak also took a hit. The world's largest photography maker slid $2.22, nearly 5.6 percent, to $37.61 after it lowered third-quarter expectations and said more job cuts are inevitable. It had announced in April it was cutting 3,500 jobs from a global payroll of 78,400.
But 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 15 cents to $21.15 in after-hours trading after ending the regular session unchanged.
Other airline stocks were mixed.
Continental fell 26 cents to $17.46, while Delta gained 23 cents to $17.66. Both companies, like American and other big carriers, have cut back their schedules by about 20 percent. They've called for federal aid to help make up for some of their losses last week, when the government shut down the nation's air traffic system for two days.
''I think the market overall is bracing for higher unemployment,'' said Robert Streed, portfolio manager of Northern Select Equity Fund.
Tech stocks were weaker, too, particularly in the semiconductor category. Intel fell $1.19 to $22.28, a 5 percent drop.
Wall Street was kind to wireless service providers, though, reflecting a revenue increase after the attack. Verizon Communications 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.
Analysts were hesitant to ascribe too much to the data, saying there are many other factors at work in the markets right now, particularly on the technical side of how stocks behave.
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, which might be contributing to the downturn.
Tom Galvin, chief investment officer for Credit Suisse First Boston, noted that Tuesday's respite squared with the market's history of stop-and-start trading in times of extreme uncertainty.
But he believes the foundation for a rally is being created as stocks become less pricey and more attractive, and the number of investors wanting to sell stock decreases.
''I continue to talk to more fund managers that are creating buy lists than sell lists,'' he said.
© 2017. All Rights Reserved. | Contact Us