The stock market slumped at midday yesterday as somber investors bailed out of airline and hotel shares after the crash of a passenger jet in New York stirred up memories of the deadly Sept. 11 attacks.
"The mood is nervous," said Dominic Freud, head of European equities trading at SG Cowen. "We had really been getting back to normality, sentiment was turning around for positive. This has really been a blow."
The mood on Wall Street changed after the crash. Traders had been forecasting a higher opening, buoyed by a solid forecast from communications gear maker Ciena Corp. But stocks skidded after an American Airlines flight carrying 246 passengers and nine crew members bound for the Dominican Republic crashed after takeoff from New York's John F. Kennedy Airport.
The cause of the crash was unclear, but the news was enough to convince officials to shut down area airports and seal off bridges and tunnels into the city. Hotel and airline stocks tumbled on fears the crash will take another bite out of the travel industry. AMR Corp., the parent of American Airlines, sank US$2.29 at US$15.84. The price of gold shot up more than US$2 an ounce as investors fled to safe havens.
The Dow Jones Industrial Average slumped 147 points, or 1.53 percent, to 9,460, after sinking more than 2 percent. All 30 components of the blue chip index floundered in negative territory. United Technology Corp, which makes aircraft engines, ranked among the biggest losers with a US$2.67 drop to US$54.39.
The Nasdaq composite index dropped 20 points, or 1.12 percent, to 1,808, after suffering a 2.5 percent loss. Ciena offered support to the tech-packed index, jumping US$1.88 to US$19.06 in active trading.
The broader Standard & Poor's 500 lost 14 points, or 1.21 percent, at 1,106.
Losers trounced winners by a ratio of 2 to 1. More than 700 million shares changed hands on Nasdaq, and more than 400 million on the New York Stock Exchange. The US Treasuries market was closed yesterday for Veterans Day.
The crash comes after the Dow on Friday finished above its Sept. 10 close, the day before the attacks. The market had recouped all of the losses suffered in the wake of the Sept. 11 assault on the World Trade Center and the Pentagon as Wall Street regained confidence and bet on an economic recovery next year.
"The crash adds to fears. It's just incredibly bad timing," said Kent Gasaway, who helps oversee US$2 billion for Kornitzer Capital Management. "Just as we were getting more confident -- now all bets are off in the short term."
Hotel and airline stocks tumbled on fears the crash will take another bite out of the travel industry. The Standard & Poor's airline index sank 6.64 percent. UAL Corp, the parent of United Airlines, dropped US$0.68 to US$10.24. Continental Airlines sank US$1.70 to US$15.90. Delta Air Lines Inc. surrendered US$2.81 to US$23.18.
The S&P hotel index dropped 3.74 percent. Hilton Hotels Corp. lost 14 cents at US$8.56, while Marriott International slumped US$1.38 to US$32.62. Four Seasons Hotels Inc. fell US$2.74 to US$34.17. Cruise ship giant Royal Caribbean International tumbled US$1.24 to US$1.59.
"It furthers the uncertainty, especially in relation to travel," said Eric Gustafson, a portfolio manager at Stein, Roe & Farnham. "Travel and commerce are critical to the health of the U.S. economy. Sentiment had been shifting to a more positive tone before this event. This could potentially act as a setback."
The S&P index gold and precious metal stocks jumped 1.27 percent. Newmont Mining Corp gained 40 cents to US$23.69, while Barrick Gold Corp rose 12 cents to US$15.83.
Security device makers and security services companies headed higher. InVision Technologies Inc., which makes sophisticated scanners used in airports to detect explosives, surged US$1.98 to US$14.28.
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