Financial World Reels After WTC Crashes
Sept. 11 -- The attacks that toppled the World Trade Center could also shake the already weakened U.S. economy, some economists believe.
Not only could financial markets plummet in the wake of the attacks on the United States, but consumer sentiment could also suffer, say economy watchers.
"The economy is on a high wire act anyway," says Sung Won Sohn, senior vice president and chief economist at Wells Fargo. "The stock market has been suffering a great deal and this is a great shock."
Investors Run for Safety
Stock futures had plummeted shortly before U.S. markets in New York and Chicago were closed today. Prices of gold bullion, oil and U.S. Treasury bonds surged as investors sought safe havens in more "secure" investments.
The New York Stock Exchange, American Stock Exchange and Nasdaq are all closed Wednesday, with a decision on when trading will resume expected then. Some traders were speculating that when markets do eventually reopen, they could be in for a drop in excess of 5 percent, according to wire reports.
"Our nation's financial markets are strong and resilient," said Treasury Secretary Paul O'Neill today. "In the face of today's tragedy, the financial system functioned extraordinarily well and I have every confidence that it will continue to do so in the days ahead."
Meanwhile, financial markets were hit around the globe as investors digested the implications of the attack. Stocks in the United Kingdom saw their biggest one-day point drop since October of 1987, with a 5.5 percent fall wiping roughly $98 billion off the value of London's FTSE 100 index.
Even worse was trading in Paris, off 7.4 percent, and Germany, off 9.2 percent. Trading was down 4 percent on the Toronto Stock Exchange, before being halted, while Brazilian markets were down 9.2 percent before they were closed.
Sohn says the impact on the economy could be similar to what happened during the recession of 1990-1991, which was aggravated by the Persian Gulf War. But the surprise nature of today's attacks could make the economic impact worse this time around.
