U.S. Stocks to Resume Trading Monday

Sept. 13, 2001 -- U.S. stock markets are expected to resume trading on Monday, ending a four-day shutdown that followed destruction of the World Trade Center.

Stock market officials, who made their decision after meetingwith representatives of the city, investment firms and localutilities, said they would test market systems Saturday. If thetest goes well, trading will resume at 9:30 a.m. ET Monday.

Treasury Secretary Paul O'Neill today expressed confidence that U.S. stock markets would hold up when they reopen. "There are markets open around the world and they seem to be calm. So I'm feeling pretty good at the moment," he told ABCNEWS.

O'Neill said the terrorist attack on the U.S. financial district hasn't altered his view that the economy is poised for a rebound. In an interview with Peter Jennings, O'Neill said he sees no need to view the economy differently today than he did on Sept. 10, the day before the attack, "even though we view the facts with a heavy heart."

The shutdown of the New York Stock Exchange, the nation'soldest, will have been the longest since a weeklong closing afterthe 1929 crash. About $100 billion worth of trades are conductedevery day in the United States, according to the SecuritiesIndustry Association.

Hundreds of other firms were forced to flee buildings that weredamaged or closed, and many companies are setting up operations atreplacement offices far from Wall Street's narrow alleys.

NYSE Chairman Richard Grasso said no one in the financialindustry suggested that resumption of trading was more importantthan the massive effort to recover "those who are still with usthat are trapped in the wreckage" of the trade center.

Damage to the American Stock Exchange, located in a building not far from the World Trade Center, was so severe that parts of its operations might be temporarily relocated to the NYSE, which remains intact, or to other regional markets, Grasso said.

Bond Trading Begins

Earlier today, treasury bond and commodities futurescontracts resumed trading in abbreviated sessions. Bonds are nottied to a physical site, while most futures trading occurs inChicago.

Trading was subdued and relatively light as futures activityresumed on the Chicago Board of Trade and Chicago MercantileExchange, where one broker called it "hollow trading" in theabsence of activity on Wall Street.

A jump in bond prices indicated that investors, nervous aboutthe economy even before Tuesday's terrorist attacks in New York andWashington, were seeking safe haven investments.

But the lack of volatility reflected increasing hopes that the Federal Reserve will lower rates for the eighth time this year. "It's very different today," said William Dalenberg, who trades Eurodollars at the Merc. "Everyone's still grieving ...Everyone's very cautious, I think, about getting into the market."

Many traders tucked small American flags in their jacket pockets.

European Markets Subdued

In overseas stock trading, Asian markets staged a modestrecovery, while European markets opened almost unchanged. Market activity on both continents Europe was subdued as investors awaited the reopening of U.S. stock exchanges.

In Europe, Swiss Re's 10.6 percent surge led a near 4 percent risefor the insurance sector. Fund managers said they were pickingup bargains following steep falls amid fears that insurancecompanies will face claims running into billions after the NewYork and Washington attacks.

"For long-term orientated investors and people that work onthe basis of rationality, there is certainly stock out therethat deserves to be picked up at current levels," said CristophBruns, head of equities at Union Investment, Germany'sthird-largest fund.

By the time European bourses shut, the pan-European FTSEEurotop 300 index added 0.8 percent and the narrower blue-chipDJ Euro Stoxx 50 put on 1 percent.

Among other insurance sector blue chips, Aegon jumped 7 percent, while Munich Re and Zurich Financial added about 5 percent each.

Damage estimates run as high as $15 billion from Tuesday'sattacks but some analysts said European insurers' liabilities may be lowerthan initially thought.

Looking for Fed to Cut Rates

The European Central Bank left interest rates on hold asexpected, but many analysts expect the Federal Reserve to cutrates when U.S. markets resume to support badly shaken global financial markets.

"Should the Fed cut before the scheduled meeting on Oct. 2, which now seems likely, the next ECB move could well comeeven sooner, either in the immediate aftermath of the Fedchange as part of a coordinated series of rate moves or at thecouncil meeting on September 27," BNP Paribas said in a note toclients.

But loosening monetary policy may not be enough to turnmarkets around, strategists said.

"Rate cuts will not make up for the fact that the globaleconomy was weakening into Tuesday's disaster and will not makeup for the fact that U.S. economic data in September willappear very weak indeed," said Bear Stearns economics andmarket strategist Steve Barrow.

"This time around the crisis has hit the United States., and indeedthe world, at a very vulnerable time indeed," said Barrow.