Bonds surge inCHICAGO >> U.S. financial markets began their gradual return to work today following a two-day shutdown with a sharp increase in bond prices reflecting investors' uneasiness about a worsened economic outlook.
The move reflectsStock trading to resume Monday
By Dave Carpenter
Trading was subdued and relatively light as futures activity resumed on the Chicago Board of Trade and Chicago Mercantile Exchange, where one broker called it "hollow trading" in the absence of any trading on still-closed New York markets.
The jump in bond prices indicated that investors, nervous about the economy even before Tuesday's terrorist attacks in New York and Washington, are seeking safe haven investments. But the lack of volatility reflected increasing hopes that the Federal Reserve will lower rates for the eighth time this year.
The Chicago exchanges resumed most of their regular trading in commodities, silver, gold, and some financial instruments related to foreign currencies and interest rates. Trading in U.S. stock-related products remained closed.
U.S. government bonds, which also resumed trading today among bond dealers and their customers, surged. The Federal Reserve and other central banks made massive amounts of cash available to the financial system in a move to restore confidence.
The Treasury's two-year note was up more than a point to yield 2.95 percent, well below its previous yield of 3.49 percent late Monday, the last day of regular trading before the attacks occurred. Long-term Treasurys rose but by a lesser degree. The 10-year note was up nearly 1 3/4 point to yield 4.64 percent, down from 4.84 percent Monday.
Corporate bonds rose to a far lesser degree, signalling that investors fear companies may have a harder time making profits amid a difficult economic environment, said analysts.
NEW YORK >> Financial firms hit by the World Trade Center attacks are shifting workers and computer networks to backup offices and racing to ready trading systems for the reopening of bond markets today and stock markets as early as tomorrow.
U.S. stock exchanges
gearing up to restart
Companies carry out
alternative plans in preparation
for trading tomorrow or Monday
By Jim Krane and Lisa Singhania
The New York Stock Exchange, Nasdaq Stock Market and other financial markets, which shut down Tuesday morning, have said they expect to be fully operational no later than Monday. Trading of U.S. government bonds was due to resume today.
The attacks knocked out electricity, phone and other basic services across Manhattan's financial district, and market officials said yesterday it might take until Monday to restore them.
Hundreds of companies' offices were destroyed, and hundreds of other firms were forced to flee buildings that were damaged or shuttered by the destruction. Even as they sought word on missing employees, the firms worked nonstop to set up operations at replacement offices far from Wall Street's narrow alleys.
Many firms, while speaking of their new arrangements, declined to specify exact locales for security reasons.
Information services company Electronic Data Systems Corp. was hustling to set up temporary New Jersey offices for a large brokerage whose World Trade Center quarters were destroyed. EDS declined to identify the company.
Merrill Lynch cannot access its football-field sized trading floors in the neighboring World Financial Center, which also suffered significant damage.
"We have contingency plans for activities to be carried out at other locations. In fact, I'm speaking to you from an emergency location right now," said Merrill Lynch spokesman Rich Silverman.
Still, the industry's task was made somewhat easier because many financial firms have their operations in other parts of New York or in other cities.
Although Bear Stearns kept a facility in the financial district to help process trades, its primary operations are in midtown Manhattan and New Jersey, said spokeswoman Elizabeth Ventura.
"Our ability to trade was not impaired by this horrible tragedy," she said. "But we do have emergency backup facilities. We have very large trading facilities ready that we would be able to move into were there an emergency."
Morgan Stanley, the biggest tenant in the World Trade Center towers that were wiped out by the attacks, keeps its trading desk elsewhere in New York. The towers were home to stock brokers who dealt with investor accounts, which are being relocated to other offices.
With its corporate headquarters in the World Financial Center unaccessible, American Express is shifting staff to lower Manhattan and New Jersey. The company's trading operations are in Minneapolis, said Ted Truscott, chief investment officer at American Express Financial Advisors.
Larger financial companies keep duplicate computer networks and store data in sites outside Manhattan, making restoring operations possible, said Dan Burke, a brokerage industry analyst for Gomez Advisors of Lincoln, Mass. Many of those data centers sit across the river in New Jersey or across the country.
"They can be up and running very quickly in an alternate location," Burke said.
Problems occur with smaller companies who back up information manually, rather than maintaining duplicate computer networks. For them, data on trades executed Monday night on overseas markets might not have been saved before the attacks, said John Jackson, president of the disaster recovery division for Comdisco, of Rosemont, Ill.
"Based on my knowledge of the companies, there is some significant data loss," said Jackson, whose company is helping rebuild networks for six World Trade Center-based companies and 29 others whose nearby offices are shuttered. "Anything they've done since the last backup occurred is lost."
Typically, the missing data is retrievable through paper records or employees' memory.
"But in this case, all the paper is gone because the building is gone. The employees who might otherwise been able to recreate the transactions might've been killed," said Jackson, whose company also recovered data for companies displaced in the 1993 World Trade Center bombing.
Businesses also turned to their emergency-services providers for temporary offices. Comdisco housed all but five of its 35 financial district customers by early yesterday afternoon. In the company's two data centers in Carlstadt and North Bergen, N.J., financial companies were given temporary desks, phones and computer terminals, along with access to servers housing trading software and backed-up data, Jackson said.
Meanwhile, General Electric Co. and Honeywell International Inc. said yesterday that they have separately launched appeals against the European Commission's decision earlier this year to block GE's planned $43 billion purchase of the diversified manufacturer. The two appeals, which were not unexpected, were filed with the Court of First Instance in Luxembourg. But the companies are not asking the EC to reverse its ruling and let the merger proceed. Rather, they are appealing against some of the Commission's conclusions in the case.