Moderation on Wall Street

The markets are now closed after the first day of trading since last Tuesday’s tragedy, and economic analysts have breathed a sigh of relief. Though the 680-point drop in the Dow Jones Industrial Average was the largest in the history of the index, it was much smaller in percentage terms than the crash of 1987—which did not bring substantial economic distress. The financial world experienced severe personal and physical loss in the terrorist attack of Sept. 11, but like the country as a whole, it seems intent on rebuilding and moving forward.

The New York Stock Exchange opened on a solemn note, with two minutes of silence in honor of those who died in the terrorist attacks. The silence was followed by the singing of “God Bless America,” led by an officer of the Marine Corps, and the opening bell was rung by New York City rescue workers.

Though the market dropped after the bell rang, earlier predictions of panicked selling were thankfully proven false. Federal Reserve Chair Alan Greenspan acted forcefully to maintain confidence, making half-point cuts in the interest rate to provide easier credit to businesses. The European Central Bank quickly followed suit, leading to a rally rather than a decline in European markets.

The market’s performance can also be partially attributed to a few key players who deserve our gratitude. Despite the considerable profit to be gained, a number of sizeable brokerage firms recommended that their clients hold onto their stocks today, including Charles Schwab & Company, Merrill Lynch & Company, Morgan Stanley Dean Witter (which had substantial offices in the World Trade Center) and Salomon Smith Barney. We are happy to see that this tragedy has brought out the best in America’s companies, showing the world that money is not our top priority.

Of course, some industries suffered particularly from the aftermath of the attack. Public concern about the safety of air travel caused declines in airline stocks of up to 50 percent or more; insurance companies who might be required to pay claims also lost value. And in an ominous sign, the stocks of military contractors fared particularly well.

Though the events of the past week brought economic life to a near-standstill, they also brought the world of work and finance into needed perspective as Americans stayed home to be with their families. The avoidance of a catastrophic crash would be good news on any morning. But today, it shows that the largest shareholders—the American people—have retained faith in their economy and in their future.