STOCKS TUMBLE; NEW YORK >> A wave of anticipated selling by nervous investors swept Wall Street when the stock market reopened today, sending the Dow Jones industrials down as much as 721.56 in intraday trading.
DOW DROPS 684
The index suffers worst point
Local stocks follow suit
drop ever despite Fed rate cutBy Amy Baldwin
Associated PressThe Dow ended off 684.81, its biggest-ever one-day decline, to 8920.70, falling below 9,000 for the first time in more than 2 12 years.
The Nasdaq and other major indexes also posted big declines in the first session since last week's terrorist attacks. Airline, insurance and entertainment stocks were among the hardest hit.
The selloff came despite the Federal Reserve cutting the federal funds rate by a half-percentage point before the market opened.
"To buy stocks you need some kind of clarity and confidence, and right now you've got neither," said Bill Barker, investment consultant at Dain Rauscher in Dallas. "The buying public is sitting on its hands. The sellers are obviously in control now, but it's difficult to tell how long that will last."
The broader market mirrored the Dow's 7.1 percent drop. The Nasdaq composite index finished down 115.83, or 6.8 percent, at 1,579.55, a level not seen since Oct. 14, 1998 when it closed at 1,540.97.
The Standard & Poor's 500 index, the broadest measure of Wall Street, declined 53.77, or 4.9 percent, to 1,038.77. The American Exchange was down 2.47 to 852.88 The NYSE fell 26.03 to 541.99 and the Russell 2000 tumbled 23.06 to 417.67.
Trading was extremely busy, evidenced by the NYSE's volume, which reached 1 billion by noon -- three hours earlier than usual.
But the selling could have been even stronger, something that was apparent in the number of stocks that fell vs. those that advanced. The ratio of decliners to advancers was close to 6 to 1, typical of the Wall Street's recent selloffs.
Investors had to digest a great deal of news today, including a half-point interest rate reduction -- the eighth cut this year -- by the Federal Reserve before the market reopened, along with a litany of companies announcing stock buybacks to boost their share prices.
Bank of Hawaii and First Hawaiian Bank followed the Fed cut with a reduction in their base lending rates, to 6 percent from 6.5 percent. Other local banks were expected to do the same.
Analysts said U.S. investors were ready to get back to trading, anxious to adjust their portfolios amid the uncertainty about the market, the economy and the overall market.
The stock market's closure -- necessary as damaged utility services were restored and investment firms scrambled to find alternate places to do business -- was also needed to give investors some time to separate their emotions from their investments, analysts said. Had the market reopened immediately, analysts said, the selloff likely would have been even more intense.
"There has been a four-day hiatus, which takes a little bit of the panic out of it. ... Of course, the Fed cutting rates, while it wasn't unexpected, it was helpful," said Larry Wachtel, market analyst at Prudential Securities. "It's not going to be a disaster. It's not going to be a meltdown."
Analysts noted that high-tech shares fared relatively well.
"It's certainly a positive that what's holding up best is the Nasdaq. If you were thinking there was panic, you would see more dumping there," said Richard A. Dickson, technical analyst for Hilliard Lyons in Louisville, Ky.
There were some winners, chiefly in defense and security, which could see an uptick in government spending. Defense contractor Lockheed Martin rose $5.63 to $43.95.
InVision Technologies, which makes systems used in detecting bombs, surged 165 percent, rising $5.14 to $8.25.
Following the devastation in the Financial District, the NYSE and the Nasdaq tested their trading systems and those of their member firms to ensure they were operating properly and would be able to process trades.
It was not immediately clear if there were any glitches that prevented investment firms from executing trades.
In a move to support the market, the Securities and Exchange Commission on Friday eased rules governing stock buybacks by companies. Several companies have announced plans to repurchase their stock as a signal of their confidence in their own shares, as well as the market and the country.
Companies that announced buybacks included networker Cisco Systems, which fell 47 cents to $14, and Starbucks, down 94 cents at $15.51.
