Economic Impact of Sept 11
Essay title: Economic Impact of Sept 11
Economic impact of Sept 11
September 11, 2001 was a day that Americans and the world for that matter will not soon forget. When two planes went into the twin towers of the World Trade Center and two others went into the Pentagon and a small town in Pennsylvania, the world was rocked. Everyone in the United States felt very vulnerable and unsafe from attacks that might follow. As a result, confidence in the CIA, FBI, and the airlines were shaken. People were scared to fly after what had happened.
The events that unfolded on September 11th and the days that followed also profoundly affected the stock market. It is the purpose of this paper is to examine what happened to both the Dow Jones Industrial Average and the NASDAQ after September 11th and how it is similar to events such as the bombing of Pearl Harbor, the Oklahoma City bombing, and the Gulf War in terms of how the stock market experienced a blow and bounced back after a while.
The stock market remained closed from September 11th until September 17th, almost a week after the attacks. When the markets re-opened after a weeklong absence, people were uncertain about what the numbers would be at the end of the day. Looking back throughout history, after a traumatic event such as the bombing of Pearl Harbor in 1941 and the Gulf War, the markets tended to go down at first but after a few months, they would rebound. When the markets closed on September 17th, the numbers were very bleak. “The Dow Jones Industrial Average was down 685 points, its biggest point drop in history, ending the day at 8,921. The NASDAQ was also down 116 points, closing at 1,580” (Stock Markets Reopen 1). These numbers also represented the major indexes lowest levels in about three years.
Along with the low stock index numbers of September 17th, the airline industry and travel stocks were also rocked. One of several airlines announcing layoffs, US Airways said that they would be terminating 11,000 jobs. These heavy losses were contributed to airlines “being grounded last week [week of September 11th], plus passengers have been apprehensive to fly, in the wake of the hijackings” (Stock Markets Reopen 1).
Americans also became concerned about the gas supply and the possibility of being unable to obtain gas. It was reported that drivers in America were lined up out in the streets for fear of not being able to get gas for their automobiles. In several places gas prices were raised. Interestingly enough, here in Columbus, I knew of people who went out to their local gas station and filled up their automobiles and all of the gas cans that they could find. Gas prices have however gone up some and seem to be staying at right around $1.35 in this area.
The stock market struggled to stay afloat in the days after its steep drop on September 17th. Things looked like they were going to remain at three-year lows until November 13th came along. On this day the Dow Jones Industrial Average gained 197 points to close at 9,751 and the NASDAQ gained 52 points to close at 1892. Oddly enough, these session highs corresponded with a world event. Much like the September 11th attacks effected the stock market negatively, the war on terrorism swinging our way helped to swing stocks up to a decent level. On November 13th, it was discovered that the recent crash of Flight 587 was ruled an accident and the war on terrorism was being effective in that it was causing the Taliban to run for cover. People were feeling good about how the war on terrorism was going and they were also glad that the airplane crash was an accident. As a result of their happiness and relief, stock market prices took off somewhat. The steep rise in prices on November 13th was compared to the rise in prices of stocks when it became clear to Americans that the Gulf War was going to be resolved easily. CNN.com said: “Today (November 13th) was kind of reminiscent of the rally we had right after it became apparent that the Gulf War was a cakewalk in the early 1990s” (Serwer 1).
About three weeks after the gains of November 13th, the stock market rebounded even further. The Dow Jones Industrial Average rose 222 points and the NASDAQ gained 83 points. These numbers are significant because it marked the first time since September 11th that the Dow Jones Average finished above 10,000. While the NASDAQs gain was not as big as the Dow Jones, its gain did have a special significance. The NASDAQs gain on December 5th marked the first time it had finished above 2,000 since August 7th.
These landmark gains made investors and stockholders very happy