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Wall Street's traders returned to work on Sept. 17, sporting grim looks, surgical masks, and lots of red, white, and blue. From the the opening bell of the New York Stock Exchange, many suspected the market was in for a rough ride on the first trading day since terrorist attacks leveled World Trade Center on Sept. 11.
"It's going down," mutters one man from Fleet Meeker Specialist, carrying a flag handed to him on the ferry. "The question is just how much, and for how long." Paul Gregory, a clerk on the trading floor for the Bank of New York, felt it, too. But he argues that the day's results wouldn't reflect the future direction of the market. "Over the next six months, I think it will bounce back," he says.
Like many heading into the exchange, Gregory's mind was on bigger issues than where the market would close. "I'm just anxious to touch base with people to see they're O.K.," he says. "I just want things to get back to normal."
DOUBLE-CHECKING. Gregory's sentiments were widely shared. There was no record percentage loss on Sept. 17 -- a victory in itself. The Dow lost a little more than 7% of its value, while the Nasdaq was off 6.8%. But standing in the city's financial center this Monday, it felt as if getting back to normal could take weeks or even months.
Dust and the smell of burning debris still linger in the air from the wreckage of the World Trade Center a few blocks away. Sirens continue to echo, and most retailers remain closed. Every corner has one and sometimes two barriers manned with police checking photo IDs before allowing workers to head to their offices, where they are checked again. Members of the National Guard patrol the area in combat fatigues, while dogs sniff their way down the streets. The local New York Sports Club has become a comfort station where rescue workers can grab a shower, sauna, snack, or catch some sleep.
Inside the Exchange, which was adorned with a 30-by-60-foot American flag, officials tried to kick off trading on a high note. Along with Treasury Secretary Paul O'Neill, NYSE Chairman and CEO Dick Grasso was accompanied by Nasdaq CEO Hardwick Simmons, New York Governor George E. Pataki, Mayor Rudolph W. Giuliani, Senator Charles E. Schumer, Senator Hillary Clinton, and representatives of the rescue crews. Grasso opened by saying, "Good morning and welcome to the greatest market on the face of the earth.... Today, America goes back to business, and we do it as a signal to those criminals who inflicted this heinous crime on America and Americans that they have lost."
IMMEDIATE PLUNGE. At 9:30, the floor fell silent for two minutes as a tribute to the close to 6,000 believed dead from the attacks. Then Major Rose-Ann Sgrignoli of the U.S. Marine Corps sang God Bless America. New York firefighters, police officers, transit workers, and emergency personnel struck the bell.
Within minutes, the Dow had plunged 600 points, as traders rushed to fill sell orders that had built up since Tuesday morning. Last week's four-day closure of U.S. markets was the longest since the Great Depression, when Franklin D. Roosevelt had declared a national banking holiday between Mar. 6 and 14 in 1933. The immediate plunge on Monday triggered what's known as rule 80A, which restricts index arbitrage activity once the market falls more than 2%.
By late morning, activity on the floor was brisk but quiet, as if the exchange's 3,300 members had resigned themselves to channeling bad news. "There was clearly some pent-up sell demand, but it's leveling off," says Arthur D. Cashin Jr., managing director of UBS PaineWebber, looking around the floor, which was decorated with American flags and numerous color photocopies of the twin towers. At the bottom of every monitor was the message "God Bless America."
"BUYERS CAN WAIT." Cashin says the selling pressure was coming from institutions, noting that some may be mutual funds or insurance companies trying to cover immediate expenses. For those that need cash, he argues, "selling is a natural motivation.... There's no necessity to buy today. The buyers can wait." Moreover, despite signs of buying interest, he admits that "no rally has quite caught fire yet."
At that moment, a trader hands Cashin a blank check from brokerage firm Edward A. Reiss, asking him to fill it out for families of missing rescue workers. Cashin, it turns out, is also chairman of the NYSE Fallen Heroes Fund, which was launched in May, 1999, to assist families of firefighters and police officers killed on the job. They hope to raise $6 million for victims' families.
The mood was buoyed somewhat by the fact that exchange members looked almost festive in their patriotic gear. Many wore ties and hats showing the American flag. Others have actually pinned flags on their backs or managed to get baseball caps from the New York Fire Dept. Several members greeted each other with long hugs, and sometimes a few tears. Robert Zito, executive vice-president of communications for the NYSE, claims he isn't surprised. "This is the most patriotic facility in the world," says Zito. "You walk onto the floor, and you can feel the red, white, and blue."
UNLIKELY REFUGE. Still, there's no question that the last week's events have taken a toll, even though many members didn't actually see what happened. After the first plane hit on the morning of Sept. 11, security officials recommended that everyone stay on the trading floor until the danger had passed. Although trading never started, Zito says about 5,000 people remained on the floor until early afternoon. Some even stayed there into the evening. "The air outside was so bad that it was the safest place to be," he says. When it reopened on Sept. 17, the exchange had three counselors on the floor Monday -- two more than usual -- to help anyone traumatized by the terrorist attacks.
The exchange was also playing host to the American Stock Exchange, which set up shop to trade equities in its "expanded blue room." The Amex trading floor, located closer to the World Trade Center, suffered too much damage to be reopened. So it shifted stock trading to the NYSE and the trading of futures and options to Philadelphia. When asked how the morning was going, Amex Chairman and CEO Salvatore F. Sodano says: "It's great. We're totally up and trading. All our products are up. It's the same as always." Then he rushed away.
While "great" was hardly the word to describe the mood, many were pleasantly surprised that things weren't much worse. Some traders had worried that damaged data lines and other infrastructure glitches might cause headaches in executing trades. Never happened. Joseph LaBarber, a floor broker with market maker Rochdale Securities, notes that "there were some problems at first, but they straightened them out right away."
As for the immediate dip in stocks, he adds: "We knew this would happen, that there would be some panic." Now comes the real test: whether the markets can stabilize and rebound in the weeks to come.
Brady is Corporation Editor for BusinessWeek Edited by Douglas Harbrecht
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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