Stocks fall sharply Monday following American Airlines crash

By AMY BALDWIN
AP Business Writer

NEW YORK – Reminded of the possibility of more terrorist attacks, investors bid stocks mostly lower Monday after an American Airlines jet crashed in New York. The market recovered from a sharper decline as news reports indicated the cause was not the result of terrorism.

In early afternoon trading, the market was mixed and investors were still wary.

"Fears are running high," said Alan Ackerman, executive vice president of Fahnestock & Co. "We're dealing with a bruised U.S. psyche, whether it is at the consumer level or the investor level. One can only hope that this plane crash had nothing to do with terrorism."

The Dow Jones industrial average was down 33.08, or 0.3 percent, at 9,574.92 after dropping as much as 198 points in very early dealings.

The broader market was mixed. The Nasdaq composite index rose 9.32, or 0.5 percent, to 1,837.80, having been down as much as 42. The Standard & Poor's 500 index slipped 1.10, or .01 percent, to 1,119.21, having declined as much as 21.

The cause of the crash, which occurred Monday morning near Kennedy Airport, was not immediately known. However, some investors, worried that it might have been the result of a terrorist attack, began selling immediately to preserve recent profits.

By early afternoon the market had recovered much of its losses as reports indicated that terrorists were not involved. But analysts said investors are wary of making big commitments to Wall Street until terrorism is officially ruled out.

Investors had been bidding the market higher on increasing confidence for an economic turnaround in 2002. On Friday, the Dow posted its best close since the Sept. 11 terrorist attacks, joining the rest of the market's major indicators in closing above its pre-attack level. The Dow, which lost 1,369 in the first week of trading following the attacks in New York and Washington, finished Friday at 9,608, just above its Sept. 10 level of 9,605.51.

But analysts said the market's comeback was vulnerable to investors' persistent fears about the possibility of more terror attacks and the spread of anthrax, which began soon after the attacks.

Meanwhile, investors could not turn to the safety of bonds, because the government bond market was closed Monday in observance of Veteran's Day.

Wall Street's losses were spread across most sectors and industries, but among the biggest losers were airlines and the companies that supply them. American's parent AMR fell $2.35 to $15.78, and Delta sank $2.59 to $23.40.

United Technologies, a supplier of jet engines, tumbled $1.82 to $55.24.

Leisure-related stocks also suffered as investors worry that skittish consumers will take fewer vacations. Consumer spending accounts for two-thirds of the nation's economy. Marriott International declined $1.03 to $32.97 and Expedia, an online travel agent, tumbled $1.03 to $30.19.

There were some gainers by early afternoon, and were mostly in technology. PMC-Sierra rose $1.03 to $20.55, and Microsoft advanced 68 cents to $65.89.

Declining issues outnumbered advancers slightly more than 4 to 3 on the New York Stock Exchange. Volume came to 574.08 million shares, below the 632.61 million shares traded at the same point Friday.

The Russell 2000 index, which tracks smaller company stocks, fell 1.96, or 0.5 percent, to 436.14.

Overseas, markets were lower Monday with Japan's Nikkei stock average finishing down 1.3 percent. Losses widened in Europe following the crash in New York. France's CAC-40 finished the day down 3.1 percent, and Britain's FT-SE 100 fell 1.9 percent. In afternoon trading, Germany's DAX index was down 2.3 percent.

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On the Net:

New York Stock Exchange: www.nyse.com

Nasdaq Stock Market: www.nasdaq.com

AP-WS-11-12-01 1325EST