From: scerir (scerir@libero.it)
Date: Wed Sep 12 2001 - 16:34:22 MDT
http://biz.yahoo.com/rb/010912/business_attack_stocks_outlook_dc_1.html
History Suggests Dow Set to Fall, Rebound
By Nick Olivari
NEW YORK (Reuters) - If history is any guide, U.S. stocks will fall when trading resumes after the devastating air attacks
on New York's World Trade Center and the Pentagon near Washington, but the long-term outlook is bullish.
A check of six events in U.S. history since 1898 shows that the Dow Jones industrial average (.DJI), the oldest U.S. market
benchmark, falls in the immediate days after a history-making event such as the bombing of Pearl Harbor, but it typically
rebounds within six months.
Based on historical trends ``we could see some short-term instability, but the long-term outlook is bullish,'' said Gibbons
Burke, an editor with MarketHistory.com, which provides trading and statistical data.
Burke checked the performance of the Dow average, which currently includes stocks of the 30 biggest U.S. companies, after
six events affecting U.S. interests since 1898.
Those events were: the sinking of the U.S. battleship Maine on Feb. 15, 1898; the sinking of the passenger ship the
Lusitania on May 7, 1915; the attack on the Pearl Harbor naval base on Dec. 7, 1941; the invasion of Kuwait by Iraq on Aug.
2, 1990; the bombing of the World Trade Center in New York on Feb. 26, 1993; and the bombing of federal offices in Oklahoma
on April 19, 1995.
A day after the event, the Dow Jones industrial average was down an average of 1.9 percent, Burke said. One week later, the
Dow average had dropped by 3 percent.
But then the average typically began to turn around, according to Burke.
Two weeks after an attack or bombing, the index was down an average 2.1 percent, and within a month it was down just 1.6
percent.
After six months, the Dow industrials were up an average 11.3 percent, and a year from the watershed event the benchmark had
gained 18.4 percent.
``In the near term, events like this cause near-term fear, panic, and economic disruption but that is when market bottoms
are formed,'' said Tim Ghriskey, head of Ghriskey Capital Partners, a money management firm for wealthy individuals. ``And
usually a year later we have stronger and much higher financial markets as economic stability and investors return.''
At the two-year mark, the Dow industrials were up an average 30.7 percent; at three years up by 50.4 percent; and after five
years up by 82.2 percent.
U.S. stocks market remained closed for a second day on Wednesday, the first time the New York Stock Exchange has closed for
two consecutive days since the end of World War II.
U.S. Securities and Exchange Commission Chairman Harvey Pitt said that he expected U.S. financial markets to open on
Thursday.
``It is our hope and expectation that the markets will resume operation tomorrow or as soon as tomorrow but I believe it
will be tomorrow,'' Pitt, whose agency regulates the U.S. stock markets, said on CBS's Early Show.
Time from Event Average Return on Dow industrials
One day -1.9 percent
One week -3.0 percent
Two weeks -2.1 percent
One month -1.6 percent
Six months +11.3 percent
One year +18.4 percent
Two years +30.7 percent
Three years +50.4 percent
Five years +82.2 percent
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