The U.S. stock markets attempted to rally Tuesday after Monday's seven percent decline. But the major stock averages closed lower, as economic uncertainty after last week's terrorist attack brought more pressure on Wall Street.
The Dow Jones Industrial Average dropped 17 points to 8,903, for a fractional decline. But the tech-weighted Nasdaq composite gave up another 1.5 percent. The broader Standard and Poor's 500 index lost 6 points.
The markets tried to rebound. Even the battered airline stocks started trading higher, as investors searched for bargains in the rubble of Monday's big sell-off.
Analysts tried to strike a positive pose. The markets, after all, kept to a narrow trading range, even when they finally slipped into negative territory again.
The mood on the floor of the New York Stock Exchange remains heavy. Everyone seems to have known someone who perished in the World Trade Center attack. The emotional toll, and the economic uncertainty one week later, were palpable.
Market-watchers say investors are still calm, no sense of panic in their activities. But Richard Berner,chief economist for the Morgan Stanley investment firm, says people have no way to measure precisely the full economic impact of last week's terrorist attack. "My perspective is the market has already priced in a lot of the bad news," he said. "What we have a lot of uncertainty about, however, is just exactly how bad that news is going to be, how widespread it's going to be. And the key issue is how long this situation is going to last. Is this just a temporary shock like some we've seen in the past?"
The cost to the airline industry is already starting to come into focus. U.S. commercial carriers warn they might be forced to seek bankruptcy protection unless the government bails them out.
The industry was hurting even before last Tuesday. Business travel is down this year. Labor costs are up. For airline analyst Julius Maldutis, the industry has now moved toward desperate straits. "They need cash infusion because some of the larger carriers are burning cash. I estimate that last week alone the major carriers lost somewhere between $2 billion and $2.5 billion. The losses will probably be another $2 billion for this week. So we are seeing some horrific numbers. And the government is going to have to provide cash and then probably some loan guarantee programs."
Meanwhile, U.S. corporate profits, already lower in a slowing economy, may be taking more losses. Leading financial institution Citigroup and credit card company American Express have lowered their earnings estimates for the year.