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Client
Communication Briefings
After its longest shutdown since 1914, the newly reopened market responded
pretty much as predicted. It wasn’t a pretty scene, with the Dow experiencing
the largest point drop in history at 684.81 and closing at 8920 for the day.
The Nasdaq, after seeing its second largest percent
drop of 115.71, closed at 1579.
However, amid the gloom there were positive signs. First, it was no small
thing that the market opened at all given the extent of the damage to Wall
Street last week. The NYSE was fully operational and handled record volume.
The opening, and the entire trading day actually, was conducted in an orderly
fashion. Even before the emotional opening bell that was sounded by members
of the New York Police and Fire Departments, the Fed announced a 50bp
reduction in both the Fed Funds and Discount rate, representing the eighth
cut of the year (and leaving the door open for an additional cut at their
regular meeting on October 2). Companies announced or extended buy back
programs and the SEC eased some restrictions to encourage buying at the open.
Despite some of the pre-bell announcements, the market opened decidedly on
the downside and the Nasdaq dropped more than 6%
out of the gate. By mid-morning, it looked like the Nasdaq
was stabilizing after the initial panic selling, and
patriotic buying and both indices were fighting to overcome their early lows.
It didn’t take long, however, for the slip to return and carry through for
the remainder of the session.
As predicted in the wake of the terrorist attacks, defense, security,
storage, and gold sectors experienced the most encouraging activity in the
market today, while airline, hotel, media, and brokerage sectors suffered
considerable declines.
In all, it was a day unlike many we see in the market—that’s
a fortunate thing. Days like this predictably follow in the aftermath of
shocking events. Uncertainty fosters skepticism and confidence often
diminishes. But as I illustrated in my last correspondence, the market is
tremendously resilient and given the severity of this particular shocking
event, it performed within, and some would argue, above, expected ranges. Once
definitive action replaces planning the retaliation, the markets will respond
more favorably to the removal of uncertainty.
I will stay in close communication with you during these trying times. While
there is little that I can personally do to change the course of market
events, please know that I am monitoring these developments closely and will
respond according to our mandate -- protecting your assets is at the
forefront of our concern.
As always, please feel free to call or e-mail us with your questions,
comments, or concerns. Sincerely, Michael
P. Haubrich, CFP |