article

Stock Watch: Terrorist Attacks Slam Markets

Posted: 11/2001

Stock Watch

Terrorist Attacks Slam Markets

The markets, along with the broader economy, came to a virtual standstill following the Sept. 11 terrorist attacks against the World Trade Center and the Pentagon. Trading was halted for four days following the tragedy.

Once they reopened, the markets suffered steep losses. Investors fear an already weak U.S. economy will plunge into recession. Airline stocks were hard hit, as travelers became fearful of flying. Overall, this could result in a boost for communications and teleconferencing stocks, as firms might be more inclined to bypass that scheduled business trip in favor of some form of videoconferencing.

The Federal Reserve, acting to stave off a recession, cut interest rates by 50 basis points. When the markets reopened Sept. 17, they sunk anyway. Federal Reserve Chairman Alan Greenspan acknowledged the terrorist attacks could result in a period of increased economic turmoil: “The shock of September 11, by markedly raising the degree of uncertainty about the future, has the potential to result in, for a time, pronounced disengagement from future commitments,” he told the Senate Banking Committee. “In the weeks ahead, as the shock wears off, we should be able to better gauge how the ongoing dynamics of these events are shaping the immediate economic outlook.”

In the meantime, the Dow Jones industrials plummeted a whopping 1,412.77 points, or 13.77 percent, finishing at 8,921 during our trading period, which ended Sept. 17. The Nasdaq suffered more, as it declined 339.28 points, or 17.68 percent, to finish the session at 1,579. The PHONE+ Stock index, while mimicking the broader markets, did not fall as hard. It lost 186.42 points, or 9.61 percent, to end the session at 1,753.34. Decliners beat advancers by 86 to 18, and six issues remained unchanged. The Service Provider index dropped 97.48 points, or 5.64 percent, to end at 1,630.90.

Qualcomm shares took a beating, as the stock dropped $17.74, or 27.92 percent to finish the session at 63.53. ABN Amro lowered its price target for Qualcomm stock to $75 from $80 and cut its 2002 earnings estimate for the company to $1.29 from $1.32 because of the company’s announced six-month delay of its cdma2000-1x services.

Tellabs also was a victim to downgrades causing its stock to slip $5, or 32.94 percent. The stock was downgraded by Credit Suisse First Boston analyst James Parmalee, who said the firm is decreasing sales and earnings expectations for the majority of companies in the telecommunications equipment business because of capital spending weakness and the economic impact from the World Trade Center destruction.

PHONE + SERVICE
PROVIDER Index

Top 10 Percentage Gainers

8/15/01 
Close 
($) 
9/17/01
Close 
($) 
Net 
Change 
($) 
Percent 
Change
(%)
Arch Communications Group Inc.  0.03  0.03  0.00  15.38
Globstar Telecom Ltd.  0.31  0.34  0.03  9.68
Aquis Communications Group Inc.  0.05  0.05  0.00  6.52
Primus Telecommunications Group Inc.  0.77  0.82  0.05  6.49
SBC Communications Inc.  43.36  44.30  0.94  2.17
Bellsouth Corp.  38.80  39.50  0.70  1.80
Alltel Corp.  56.90  56.62  -0.28  -0.49
Western Wireless Corp.  30.19  29.94  -0.25  -0.83
US LEC Corp.  3.00  2.96  -0.04  -1.34
General Communication Inc.  12.05  11.50  -0.55  -4.56
Top 10 Percentage Losers
Motient Corp.  0.48  0.13  -0.35  -72.92
Microcell Telecommunications Inc.  7.65  2.40  -5.25  -68.63
Adelphia Business Solutions  3.90  1.60  -2.30  -58.97
McLeodUSA Inc.  2.00  0.90  -1.10  -55.00
RCN Corp.  4.10  1.97  -2.13  -51.95
Metromedia Fiber Network Inc.  0.70  0.40  -0.30  -42.86
Tel-Save.com  0.57  0.33  -0.24  -42.11
Electric Lightwave Inc.  1.19  0.73  -0.46  -38.66
ITC^Deltacom Inc.  2.40  1.62  -0.78  -32.50
Nextel Communications Inc.  13.65  9.32 – 4.33  -31.72

 

Indices 8/15/01
Close 
9/17/01
Close 
Net Change  Percent Change
PHONE+ Stock Index 1939.76  1753.34  -186.42  -9.61
Service Provider Index  1728.38  1630.90  -97.48  -5.64
Dow Jones Industrial Average  10345.95  8921.18  -1424.77  -13.77
S&P 500 Stock Index  1178.02  1038.77  -139.25  -11.82
NASDAQ Composite Index  1918.89  1579.61  -339.28  -17.68
NYSE Composite Index  605.90  541.99 – 63.91  -10.55
Market Diary:
Advances: 18
Declines: 86
Unchanged: 6
Source: CNET Investor (investor.cnet.com) Boulder, Colorado. This information is based on sources believed to be reliable, and while extensive efforts are made to ensure its accuracy, no guarantees can be made. CNET Investor assumes no liability for any inaccuracies.


Leave a comment

Your email address will not be published. Required fields are marked *

The ID is: 69082