When Wall Street resumes trading -- presumably on Monday -- the stock market will face extraordinary circumstances and even greater uncertainty than usual.
The market is on edge as it waits to see how investors react on the first day of trading following Tuesday's terrorist attacks on the World Trade Center and Pentagon.
Analysts said traders might refrain from making any major moves, mindful that thousands of people are believed dead. However, many investors, worried about the future of the market, the economy and the country, probably want to adjust their portfolios.
Federal regulators, cognizant of the anxiety, announced steps Friday aimed at stabilizing the market.
"The fear factor right now is extremely high. Many people are of a mind to just get out of the market while they can," said Alan Ackerman, executive vice president of Fahnestock & Co. "Conversely, professionals and experienced investors know that patience pays off. So, hopefully the fear factor could be somewhat limited."
The market has been closed since the attacks as the exchanges, big investment firms and Securities and Exchange Commission dealt with how to resume trading in an orderly fashion. Equipment had to be repaired before the New York Stock Exchange, located in the heart of the financial district near the World Trade Center site, could be reopened.
And brokers and investment bankers whose offices were destroyed or damaged had to scramble to find temporary space to do business. Perhaps the market's biggest unknown is whether fearful investors will rush to dump shares.
"How bad is it going to be? Will there be a big selloff?" are the questions on Wall Street, said Arthur Hogan, chief market analyst at Jefferies & Co.
Hogan said he doubts there will be a selling frenzy, calling it inappropriate in light of the tragedy.
"Everyone is going to sort of keep their head down, be careful and not make big bets," Hogan said.
He also said that with the market having been closed since Monday, investors might be less likely to make emotional decisions.
``There has been time to let calmer heads prevail,'' Hogan said.
``We are going to get back to business as usual to the best we can, and I think that will sort of put a floor in the marketplace.''
The SEC, trying to ensure that trading will be as orderly as possible, said Friday it was relaxing some trading rules to make it easier for companies to buy back their own shares. When firms repurchase stock -- which many did after the 1987 crash -- investors are often reassured, believing that the nation's companies are expressing confidence in themselves, the market and the economy.
Some companies have already announced plans to buy back their stock, including Cisco Systems, which said Thursday it will repurchase up to US$3 billion worth during the next two years.
Analysts also pointed out that the market has other safeguards to keep it from falling too sharply, the circuit breakers that halt trading after the Dow Jones industrials fall 850 points, 1,750 points and 2,600 points.
"Short-term, there is uncertainty, pessimism, and worry as we emotionally rally out of the tragedy," said Gibbons Burke, editor of Markethistory.com.
An indication of investors' nervousness came from overseas trading. Stock prices fell initially after the attacks and then rebounded. But Friday, with the resumption of New York trading approaching, prices were down sharply in Europe. But analysts believe national pride might help support the market.
"There seem to be a lot of patriots who are determined to make sure that these terrorists are not successful in shutting down our capitalist markets," said James Collins, chief executive officer of Insight Capital Research and Management in Walnut Creek, California.
Some individual investors also say patriotism will move them to buy stocks.
"What better way to respond to this terroristic attack?," asked Jim Lawrence, a networking equipment salesman in San Francisco, who has US$2,000 to invest and planned to spend the weekend researching stocks he'll buy.
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