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Cautious Stock Market Closes Mostly Unchanged Monday - 2001-10-08

The U.S. stock markets were under pressure Monday, one day after the onset of U.S. military action against terrorists in Afghanistan.

The Dow Jones Industrial Average dropped 52 points (0.6 percent), to 9,068. The broader Standard & Poor's 500 Index lost nine points(0.8 percent) ending the day at 1,062. The tech-weighted Nasdaq Composite Index closed fractionally higher, up 0.7 points to 1,606.

Trading activity was relatively quiet on lower volume. Analysts say part of that could be investor caution due to the uncertain course of U.S.-led military action against terrorism.

Defense-related stocks soared. Wall Street is betting the U.S. government will increase spending on military goods, not only through next year, but beyond.

Meanwhile, hotel and entertainment stocks moved lower, including shares of amusement park owner Walt Disney. Traders took cash out of companies that could be hurt by a sharp decline in travel.

Despite pockets of upward movement in the market, investment strategist Ned Riley says nothing is very safe during times like these. "There is really no place to hide in an environment like this," he said. "They'll take them [stocks] all down to some degree or another. And obviously everybody is still thinking about retaliation. So, if someone is looking for safe stocks for the next two or three weeks, if we have a problem all stocks are going to come down. And I still think that's hanging over the market, at least shorter-term, without any question."

And then, there is also continuing concern over corporate profits, which have been weakening all year. "Earnings season is upon us," said Sambo Lewis a trader with the SG Cowen investment firm. "We're seeing no positive surprises other than a couple that were mentioned last week. So I think we have a typical October, which historically has not been the greatest, in front of us."

In other news, investment firm Morgan Stanley has decided to sell a new 32-story office tower in midtown Manhattan to rival Lehman Brothers, becoming one of the first Wall Street firms to get rid of a large piece of real estate after last month's terrorist attack.

Morgan Stanley says it will still maintain its headquarters in New York. Morgan Stanley's World Trade Center offices were obliterated on September 11.

As for Lehman, the brokerage firm says it will now be able to keep more than 5,000 jobs in Manhattan. Lehman was forced to evacuate its headquarters, which was near the wreckage of the "twin towers" in lower Manhattan.