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Traders Dump And Run

Skittish investors sent stocks plummeting Monday on Wall Street's first trading day since last week's terrorist attacks. The Dow hit a record for a one-day point drop and closed below 9,000 for the first time in more than two-and-a-half years.

Within half an hour the Dow was down more than 600 points as the resumption ended the stock market's longest shutdown since the Depression.

Around $590 billion in stock value was wiped out in Monday's trading. The Dow Jones industrial average skidded 685 points to close at 8,921. Its previous record for a one-day drop was 617.78, set April 14, 2000.

The Nasdaq composite index dropped more than 116 points to 1,580.

"Nothing seemed to work today. It was just an overwhelming sense of 'let's sell first and sit on our hands and wait for developments,'" said Larry Wachtel of Prudential Financial.

Initial heavy selling was widely expected in a market already fragile because of poor corporate profits and outlooks. And since the attacks, which shut the nation's stock market for four days, the major airlines have announced cutbacks and reduced schedules, adding to investors' nervousness about the future.

The Standard & Poor's Airlines Index, which tracks U.S. airlines, sank 160.91 points in early afternoon, or more than 30 percent, to 372.33. Overall, about $6 billion was sheared off the market capitalization of the top six U.S. airlines.

"Given what took place in the Asian markets and other markets, some could say that this was not unexpected, but beyond that the fundamentals of the economy remain very strongly and solidly in place," White House spokesman Ari Fleischer told reporters.

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But the Federal Reserve, hoping to boost the economy and the market's confidence, cut interest rates by a half-point — the eighth rate cut so far this year — an hour before trading began.

The nation's financial leaders had called on investors to treat the market's reopening as a buying opportunity instead of a reason to sell.

One of the country's best-known investors, Warren Buffett, said Sunday on CBS News' 60 Minutes, "I won't be selling anything."

"If prices would fall significantly, there's some things I might buy," Buffett said. "'s not a different country economically than it was a week ago."

Traders hugged and cried on the floor of the New York Stock Exchange as they observed two minutes of silence before trading began, followed by the singing of "God Bless America."

The opening bell was rung by members of the police and fire departments along with representatives of other agencies involved in the rescue and recovery efforts at the World Trade Center disaster site.

NYSE workers had to show identification to National Guardsmen.

"Let us celebrate these wonderful men and women," said NYSE Chairman Richard A. Grasso, who was surrounded by federal, state and local officials on a balcony overlooking the exchange floor.

Outside, a huge American flag was draped across the NYSE's famed columns.

European markets liked what they heard, reports CBS News Correspondent Sam Litzinger in London: They rallied on the news that the Federal Reserve Board has cut interest rates.

The main market indicator in Britain, the Footsie 100, jumped sharply just after the announcement and closed up nearly 3 percent. Some broader indicators are still down since last week's attack, by as much as ten percent, in some cases. And Tokyo shares were down nearly five percent before the Fed decision.

Patriots Trade Against The Grain

ST. LOUIS- Individual investors may have heeded the patriotic call to hold onto or even buy stocks on Monday, with several brokerages reporting a spike in trading volume and one saying it's seen strong interest in buying.

As of 2 p.m. EST, Edward Jones & Co. said it has accomplished 40,000 trades from small investors. About 75 percent of the orders were to buy stocks while 25 percent were to sell. "That's high," said Regina Deluca, Edward Jones spokeswoman.

Normally, the privately held brokerage sees 10,000 trades on a Monday, with about a 50-50 split between buy and sell orders.

Datek Online spokesman Michael Dunn said Monday morning was "hectic. We're seeing pretty strong activty."

The Internet broker had executed 29,000 trades as of 11 a.m. EST. Traditionally, "it's slow in the summer," Dunn said.

Ameritrade, another online broker, said the trading volume by noon EST was higher than an average trading day.


Still, the interest rate cut is giving traders abroad reason for hope, a commodity that's been in short supply in recent days.

The four-day market closing was the longest for the NYSE since March 1933 when the government shuttered the exchange for more than a week for a banking holiday during the Depression.

On Monday, Nick Matera of Staten Island arrived at the NYSE in the blue jacket of a trading floor worker.

He called the opening "symbolic more than anything else" and noted the changed environment, saying: "It's an odd feeling with the smoke and all."

Businesses spent the weekend cleaning up the debris littering the financial district. Utility workers laid and rewired thousands of cables to restore telecommunications and power, while the city prepared the subway system for its first real use in nearly a week.

But challenges remain.

Although the larger investment houses have relocated their operations in backup locations outside the financial district, others struggled to get their offices up and running.

"They're opening the exchange so that every individual investor can participate, but we can't because we don't have connectivity," said Ray Velez, a manager at a day-trading firm near the NYSE that lacks access to the Internet and other data services needed to compete in the markets.

A variety of steps were being taken to smooth the resumption of trading.

The Securities and Exchange Commission has announced a series of rules that, among other things, make it easier for firms to buy back their own stock.

Grasso said there would be no constraints on trading, with limit orders being processed as well as short sales, those in which traders make money by betting the market goes down. He also said the NYSE should be able to handle any volume of trading, noting that the exchange has the capacity for five times the current average daily volume of about 1.2 billion shares.

©MMI, CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press and Reuters Limited contributed to this report

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