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 11 th and the days that followed also profoundly effected 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 11 th 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 11 th until September 17 th, almost a week after the attacks. When the markets re-opened after a week long 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 17 th, 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 17 th, 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 11 th], 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 17 th. Things looked like they were going to remain at three-year lows until November 13 th 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 11 th attacks effected the stock market negatively, the war on terrorism swinging our way helped to swing stocks up to a decent level. On November 13 th, 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 13 th 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 13 th) was kind of reminiscent of the rally we had right after it became apparent that the Gulf War was a cakewalk in the early 1990 s" (Serwer 1). About three weeks after the gains of November 13 th, 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 11 th that the Dow Jones Average finished above 10, 000. While the NASDAQ's gain was not as big as the Dow Jones, its gain did have a special significance. The NASDAQ's gain on December 5 th marked the first time it had finished above 2, 000 since August 7 th. These landmark gains made investors and stockholders very happy and optimistic about the future of the stock market.
People believed that December 5 th's closing numbers were the beginning of a "powerful uprising in the market" and investors "anticipated future swings" (Stock Market Rebounds 1). Looking back on those December 5 th's closing numbers, it is clear to see that the resurgence on that day did not hold out. As of this June, the "major indexes continue to see short, violent surges amid longer-term declines" (U lick 1). At one point during June U. S.
stock were at their lows for the year. People are still very much concerned with the market and with good reason. The market "tumbled to three-year lows" (Ulric k 1) following the attacks on September 11 th. In the same way that it takes a while for a person to recover from a terrible illness, it will take a while for the stock market to rebound to pre-September 11 th levels. People are unsure of how long it will take the market to recover but most agree that it will eventually.
In conclusion, I chose this topic for two reasons. The first reason that I chose this topic is because I love history. September 11, 2001 will be studied by people for generations to come as one of the most earth-shaking, life-changing events ever to take place on the face of the earth. It was interesting to study the events of September 11 th in a historical and an economic sense.
It was also interesting to see how very closely history and economics are related. After studying this, its clear to see that world events that seem to have nothing to do with economics can have a profound effect on the stock market world. It was interesting to see how people's feelings about how the war on terrorism was going could effect how they felt about spending and stocks. The second reason that I chose this topic for my paper is because I am fascinated by the stock market. I have followed several stocks over the past few years such as Microsoft and Wal-Mart just to see how they are performing. These stocks are interesting to me because I love computers and Wal-Mart is where I buy most of my everyday products like food and cosmetics.
My mother also owns some stock in the National Bank of Commerce (NBC) so that stock is of some interest to me. It's intriguing to see how a change in the stock market closing numbers can have an effect on all of the stocks that are on the market regardless of whether or not the individual stocks did well or not that day. Before I conducted research for this paper, I did not realize how very closely economics was related to every aspect of human existence. Now after studying the stock market, it's clear to see that the stock market can start a chain reaction in other areas like airlines. For example, with the September 11 th attacks came a sharp decline in stock prices particularly in the travel and airline stocks.
This decrease also caused workers to be paid off by the thousands and possibly caused airline tickets to go up with the cutback in the number of flights that were leaving out of airports around the U. S.