Lest we forget...The DOW and SPX and SOX will finish UP for the week and compare today's psychology to the week of September 21 and this article:
Worst week since '33
Free fall, recovery define day filled with uncertainty
By Kathy Bergen
Tribune staff reporter
September 22, 2001
Nervous investors sent stocks on another bumpy descent Friday, capping the worst week on Wall Street since the Great
Depression.
The markets alternated between virtual free fall and sharp recovery Friday as fears of a prolonged war and a plunge into
recession led to the fourth big sell-off in five days.
Since Wall Street's emotional reopening Monday in the wake of last week's terrorist attacks, the blue-chip Dow Jones
industrial average has posted its biggest single-day and weekly point losses ever as investors tried to come to grips with the
dramatic changes in the political and economic landscape.
For the week, the Dow plunged nearly 1,370 points, or 14.3 percent. The point drop far surpassed the 861.21 record set the
week ending March 16, and the percentage drop was the biggest since July 1933.
The tech-heavy Nasdaq composite index, already battered this year, lost another 16 percent this week, topped off by Friday's
drop of 47.74 points, or 3.2 percent, to 1423.19.
"It's been like the Depression, World War II and the stock market crash in 1987--that's how bad it's been," said Anthony
Kolton, president of Markethistory.com in Chicago.
In fact, in most cases, it was worse. Markethistory.com said this week's fall surpassed several other notable drops, including
14.2 percent in May 1940, when Europe fell to Adolf Hitler; 13.5 percent in early November 1929, in the wake of the Oct. 29
crash; and 13.2 percent the week of the October 1987 crash.
For the post-World War II generations, "this probably was the worst week of our lives, emotionally and financially," said
investment adviser and author Peter J. Tanous, president of Lynx Investment Advisory in Washington, D.C.
Hanging over the market was uncertainty about what the U.S. would do in response to last week's terrorist attacks and
growing apprehension about the economy as the drumbeat of corporate layoffs and earnings warnings continued.
Adding to selling pressure were the quarterly expiration of index futures and index and stock options, known as triple witching,
and traders' unwillingness to hold positions over the weekend in an uncertain time, said Marshall Front, chairman of Front
Barnett Associates in Chicago.
"This overwhelmed the market, and the market fell back," he said.
After taking a 313-point fall in the opening minutes of trading, the Dow surged to a gain of more than 50 points in just over half
an hour after General Electric issued an upbeat earnings outlook. But, almost inevitably, it fell back again.
For the day, the Dow fell 140.40 points, to 8235.81, a loss of 1.7 percent.
The Standard & Poor's 500 index fell 18.74 points, or 1.9 percent, to 965.80, pushing its loss for the week to 11.6 percent.
For the year, the Nasdaq is down 42.4 percent, the Dow is down 23.6 percent and the S&P is off 26.8 percent.
Volume was extremely heavy Friday, with more than 2.3 billion shares traded at the New York Stock Exchange, second only
to the record 2.36 billion shares traded on Monday. In fact, Monday, Wednesday and Friday of this week were the busiest
days in NYSE history.
"In a way, this is a return to rationality," said veteran market historian and author Peter Bernstein, a New York-based
consultant to institutional investors. "Until this week, we were in a bear market that thought it was a bull market ... and what's
happening now, as awful as it appears, is a waking up to the reality that the economy is in trouble and stocks were priced too
high."
Further decline possible
Some observers assert that price-to-earnings ratios are still greater than historical norms, and said major indexes could drop
much more than they have already.
But others caution against trying to guess at a bottom.
"Trying to guess a support level in a down market is a bit like playing volleyball on the Dan Ryan," said Ralph Wanger, chief
investment officer of Liberty Wanger Asset Management in Chicago. "It's sporty, but it's not safe."
Some observers see reasons for optimism.
An easing of the money supply by central banks around the world, spending plans by the U.S. government and strength in the
U.S. banking system are all positives, Bernstein said.
`Ripe for recovery'
As well, "when you see this much bearishness, typically the market is ripe for recovery," Front said. "But you need a catalyst,
and it's difficult to know what that will be."
Eventually, "people will decide to go back to normal life," Wanger said. "In a few months, people will decide they really would
like to take the kids to Disney World."
Amid the gloom Friday, Chicago-based Heller Financial Inc. gained $2.06, or 4.1 percent, to $51.90, after new General
Electric Chief Executive Jeffrey Immelt expressed confidence that GE's plans to buy Heller would succeed.
Best Regards, J.T. |
