Monday, October 08, 2001

U.S. attacks could hurt Wall Street

The Associated Press

        NEW YORK — Stock prices are expected to come under pressure Monday, jeopardizing last week's healthy gains, as traders await the markets response to military attacks on the Taliban in Afghanistan.

        There is a chance stocks could briefly rally, a sort of patriotic nod from Wall Street, analysts said.

        But they also believe the buying will fizzle as investors worry whether the United States will suffer more terrorist attacks after American and British forces unleashed missile attacks Sunday against military targets and Osama bin Laden's training camps inside Afghanistan, opening a new front in the war against terrorists blamed for the attacks that murdered thousands in New York and Washington.

        “I wouldn't be surprised to see (the market) go up initially, but that probably won't last. I have heard worries that there is a 100 percent chance of another terrorist attack if we attack Afghanistan,” said Richard A. Dickson, a technical analyst for Hilliard Lyons in Louisville, Ky. “The market will not respond well to that.”

        Although Americans had been expecting the United States to launch strikes against Afghanistan as it did Sunday, Wall Street will remain mired in its uncertainty over what that means for the health of the economy and the market. That spells losses for the stock market, analysts said.

        “People are going to start thinking, "What is going to happen next? Will it be bioterrorism?,” Dickson said.

        The political uncertainty combined with last week's rally on Wall Street build a strong case that stocks will fall Monday, analysts said.

        “We are probably in good shape for a decline anyway,” Dickson said.

        The market has been alternating between spurts of buying and selling stocks since the Sept. 11 terrorist attacks that leveled the World Trade Center and damaged the Pentagon.

        Last week, Wall Street was feeling optimistic enough to give buying a turn, sending the Dow industrials up 272.21, or 3.1 percent. The blue chips have now recovered 884 points, or nearly 65 percent, of the 1,369 lost in the first week of trading following last month's attacks.

        The Nasdaq composite index, which lost 272 points in the first week of trading after the attacks, rose 106.50, or 7.1 percent. The tech-focused index has posted gains for the previous four trading session, a kind of winning streak not seen since June 26-29.

        The market's advance was due in part to positive outlooks from the Federal Reserve's ninth interest rate cut this year, a push by President Bush for an economic stimulus package worth $60 billion and positive outlooks from Dell Computer and Cisco Systems.


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