Not even an early morning interest rate cut from the Federal Reserve could shore up losses in the US markets yesterday, as jittery investors went on a selling spree, fearing that last week's terrorist attacks could lead to a worldwide recession.
The S&P 500 closed down 4.92 per cent, while the Nasdaq ended 6.82 per cent lower and the Dow Jones Industrial Average finished the day down 7.12 per cent, or 684.81 points in a record one-day point loss.
The Dow's previous one-day record loss was on March 14, 2000, when the index plummeted 617.78 points.
After a precipitous drop in early trading Monday, the markets continued to post losses as nervous investors decided to unload some of their more vulnerable securities, such as airline stocks, while gobbling up defense industry shares.
Major tech stocks also took a beating.
Microsoft (MSFT) fell 8.11 per cent, while Yahoo (YHOO) traded down nearly 7.32 per cent. Dell Computer (DELL) slipped 8.28 per cent, Intel (INTC) was down 9.24 per cent, and Compaq Computer (CPQ) slid 15.45 per cent, while Amazon.com (AMZN) dropped 13.20 per cent.
The trading was expected in light of what was happening with the economy before last Tuesday, said Gartner analyst David Furlonger, who added that there was a backlog of sell orders that hadn't been dealt with after the disaster.
And besides the high volume of trading, the systems themselves have held up very well, Furlonger said.
With telecommunication systems in New York, and particularly lower Manhattan, damaged in the attacks, there was some concern over the functioning of the exchanges. The NYSE, Nasdaq and American Stock Exchange (AMEX) all conducted tests on Sunday, however, to ensure that trading would function normally.
Due to damage to its facilities, the AMEX exchange is currently operating out of space at the NYSE and the Philadelphia Stock Exchange.