Terrorist Attack Strikes at Heart of Financial District

Sept. 11, 2001 -- Wall Street turned its horrified attention to casualties and the ongoing rescue efforts following the collapse today of the twin towers of the World Trade Center in a terrorist attack.

Wall Street exchanges did not open today, and other U.S. markets halted trading after hijacked commercial airliners crashed into the World Trade Center towers as well as the Pentagon in Washington, D.C. A fourth plane crashed near Pittsburgh.

The New York Stock Exchange, American Stock Exchange and the Nasdaq exchange will all be closed Wednesday. The markets also plan to decide Wednesday when trading will resume.

"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."

In New York, stock futures plunged before market trading was suspended indefinitely before the opening bell. In Chicago, businesses, stock and commodities exchanges were evacuated.

Harvey Pitt, chairman of the Securities and Exchange Commission, said trading will resume as soon as it is practical to do so.

The Federal Reserve reported it is prepared to provide additional money to nation's banking system as needed following the apparent attacks. The promise to supply additional money to the banking system was similar to a pledge that the Fed issued on the morning after the October 1987 stock market crash, when the market plunged by more than 500 points in one day of trading.

Global Markets Rocked By the News

Foreign financial markets fell sharply on news of the attacks. The London FTSE index plummeted 5.7 percent, its biggest one-day fall since 1987, wiping out $98 billion off the value of shares.

Stocks were down 7½ percent in Paris and 9.2 percent in Germany.

Traders in Europe were in mourning, afraid they had lost colleagues and friends in the carnage. "We are in shock," said one equity dealer in London. "The implications are huge. What happens now?"

The pan-European FTSE Eurotop 300 was down 6.72 percent. All of Europe's sector indices fell, except energy, with insurers hit the hardest, dropping 11 percent. Shares in European airlines also slumped as Europe's major carriers said they had recalled flights en route to North America.

Investors seeking safe havens drove up prices of U.S. Treasuries, oil, gold and the Swiss franc. The U.S. dollar declined in overseas trading.

Investors were driven to safe haven assets by concern that the attacks may push the U.S. economy into recession.

"If the U.S. was on the brink of recession, and may have avoided it before, now they will not avoid it," said Adrian Jarvis, head of strategy at Morley Fund Management in London. Jarvis drew a parallel with the Gulf War in 1990, which he said tipped the United States into recession a decade ago.

Financial Services Firms Based in World Trade Center

Several top financial services firms have offices in the World Trade Center, including Morgan Stanley Dean Witter, Credit Suisse, Commerzbank and Deutsche Bank. Representatives from those banks did not return calls seeking comment.

Many financial services firms have moved their headquarters from lower Manhattan to Midtown, but still maintain trading operations close to the Wall Street area.

Morgan Stanley is the largest tenant in the World Trade Center complex, leasing about 50 floors of the twin towers destroyed today. A spokesman with the brokerage declined to comment on the status of company employees, but said the a toll-free hotline — (888) 883-4391 — was set up for employees and their families.

Some 50,000 employees worked at the World Trade Center, which housed 155 businesses.

The damage caused in the center of the global financial world could paralyze markets for some time to come, especially after collapse of both World Trade Center towers and a nearby building Seven World Trade Center.

Insurance experts said the damage caused by the two airplanes will cost insurers billions of dollars.

In New York, traders were trying to assess the fallout from the attack.

"It will be awful tomorrow," said Stanley Nabi, managing director at Credit Suisse First Boston, which oversees $110 billion. "There are two reasons. The first is psychological. Obviously, this is a blow. The second is fundamental. I think this will make the slowdown accelerate into a recession."

The Associated Press and Reuters contributed to this report.