Stocks held big losses in midday trading Thursday as nervous investors kept up the selling for the fourth straight day since the market reopened after hijacked airliners leveled the World Trade Center in New York's financial district and slammed part of the Pentagon near Washington, D.C.
Wall Street, mourning the likely loss of nearly 6,000 people just three blocks from the New York Stock Exchange, is now confronting the damage to Corporate America and girding for possible bloodshed in the Middle East. But many strategists feel the more than 10 percent decline in the major stock gauges since the attacks is fueled more by emotion than logic.
"It's just emotion," says Edgar Peters, chief investment officer at PanAgora Asset Management, which manages $15 billion. "The market currently is pricing in a 50 to 60 percent drop in earnings for companies in the Standard & Poor's 500. We have never had a drop in earnings that large in history, even in the Great Depression. The market is incredibly undervalued. This is the speculative bubble backward."
The blue-chip Dow Jones industrial average sank X points, or X percent, to X. The tech-laced Nasdaq dropped X points, or X percent, to 1,499.99, also sinking more than 3 percent earlier. The major market gauges have scraped new three-year lows since the attacks.
Federal Reserve chairman Alan Greenspan told Congress on Thursday that the attacks will damage the economy in the short-term by making Americans fearful of the future but won't dampen bright long-term prospects. The central bank has cut interest rates eight times this year to buoy the economy.
"Indeed, much economic activity ground to a halt last week," Greenspan said in a speech to the Senate Banking Committee. "But the foundations of our free society remain sound, and I am confident that we will recover and prosper as we have in the past."
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Additional reporting for this story is from Reuters
