The first week of stock trading on Wall Street after the September 11 attack on the heart of the world's financial center was a dismal affair. Trading operations resumed smoothly after a four-day shutdown. But the major averages plunged, as the markets turned in one of their worst weekly performances ever.
The Dow Jones Industrial Average fell another 140 points Friday, one and two-thirds percent, to 8,235. The tech-weighted Nasdaq composite gave up another 3.2 percent. The broader Standard and Poor's 500 index lost 18 points, 1.8 percent.
The entire week was challenging. The Dow Industrials dropped a little over 14 percent since the September 11 attack. The Nasdaq lost 16 percent.
Negative corporate earnings news, announcements of massive layoffs, fears of recession, and the painful awareness of so many lives lost, created a volatile emotional environment.
General Electric cheered the market momentarily. The world's biggest company, in terms of market value, said it remains on track for double-digit growth this year. But it was not enough to offset the less prosperous picture offered by dozens of other U.S. companies.
Investors, gripped by economic and political uncertainty, were not interested in buying. "Sell" was the overiding theme on Wall Street.
"If you're thinking of buying in this kind of destabilized environment, it gives you second thoughts, because new events could take place - the proverbial "other shoe to drop," said veteran market-watcher Art Cashin.
Another analyst described the uncertainty as "battling ghosts," the intangible factors that could strike at investor confidence and drive stock prices even lower. Traders talked about U.S. military plans for retaliation, even fears of more terrorist attacks against the United States.
However, investment strategist Ned Riley believes a lot of stock unloading this past week was done by inexperienced investors and fund managers, who see only the short-term.
"These investors have never been through a 'bear' market," he explains. " They don't have a clue what a 'bottom' means. They don't have a clue in terms of where the actual low is going to be. And they don't understand that selling some of these stocks, they'll probably turn around and buy them 20 or 30 percent higher after the market turns around."
The bigger worry on Wall Street was whether the September 11 attack and its repercussions will push the U.S. economy into recession. A growing number of experts now believe a recession cannot be avoided.
But Mark Vitner, a senior economist with the First Union Securities investment firm, does not think it will be long or deep. He says steps toward recovery were being taken before September 11, as companies reduced inventories and consumers reduced their debt burdens.
"We're already working through the process that's going to lead us to recovery. We still have some downside in the immediate term, and the attack will exaggerate that to the downside," he says. " But it should lead to a slightly stronger recovery in the second half of 2002."
Many economists say the policy of easing credit by the U.S. central bank, which they believe will continue, and government spending plans in the wake of the terror attack, will limit the economic downturn.