US stocks close higher despite London terror attacks

NEW YORK (AP) - Surprisingly calm investors pushed stocks modestly higher Thursday, helping Wall Street recover from steep early losses after the London terror attacks that killed at least 40 people and injured more than 700. 

Investors took heart after the homeland security secretary said there was no "specific credible evidence'' of a pending attack in the United States. A sharp drop in oil prices also helped the markets rally. 

Traders said the timing of the London attacks, several hours before the start of trading in New York, allowed investors to overcome any knee-jerk reactions to the news. Jay Suskind, head trader at Ryan Beck & Co., noted that buy orders quickly entered the market as stocks sold off at the opening bell, and the markets made steady gains throughout the day. 

"Unfortunately, this is the world we live in now. Five years ago, the market would have been down much more. Now, we see it as a buying opportunity,'' Suskind said. "There's no panic.'' 

The Dow Jones industrial average climbed 31.61, or 0.31 percent, to 10,302.29. The Dow had fallen more than 103 points in the first hour of trading. 

Broader stock indicators also recovered to post gains for the day.  

The Nasdaq composite index rose 7.01, or 0.34 percent, to 2,075.66, while the Standard & Poor's 500 index was up 2.93, or 0.25 percent, at 1,197.87. 

The major indexes opened about 1 percent lower, but climbed steadily through the session, jumping higher around noon as Homeland Security Secretary Michael Chertoff commented that there was no evidence of a terrorist threat in the United States. 

Nonetheless, investors bought up bonds, always seen as a safer investment than stocks. The yield on the 10-year Treasury note fell to 4.06 from 4.07 percent late Wednesday. 

Gold prices, another traditional safe haven for investors, also rose. 

The dollar hit a 14-month high against the British pound after the explosions, but fell against the euro and was mixed against other major currencies. 

Crude oil futures fell sharply after the Energy Department reported a drawdown of 3.6 million barrels of crude from the nation's petroleum reserves.  

Gasoline reserves also fell, but heating oil and other distillate reserves were up sharply. 

A barrel of light crude settled at $60.73, down 55 cents, on the New York Mercantile Exchange after losing more than $2 per barrel earlier in the session. 

Europe's markets suffered sharp losses, but investors were hopeful after European stocks regain some ground in late trading. 

Britain's FTSE 100 fell by as much as 4 percent, but recovered somewhat and closed 1.36 percent lower. 

France's CAC-40 fell 4.5 percent before recovering to a loss of 1.39 percent for the session, and Germany's DAX index was down 1.85 percent. 

"American investors are not only reacting emotionally, they're trying to figure things out, trying to determine the economic impact of what happened,'' said Ken Tower, chief market strategist for Schwab's CyberTrader. 

"When you're not at the epicenter, that's easier to do. There were many more cooler heads outside of New York after 9/11, after all.'' 

In addition, U.S. markets have become somewhat used to the threat of terrorism after the Madril rail bombings of 2004 and deadly attacks the previous year in Morocco, Turkey and Saudi Arabia that were all linked to al-Qaida. 

"A certain amount of this is built in to the market,'' Suskind said. 

"And sad to say, when it's overseas and isn't targeting financial institutions, the markets can recover pretty quickly.'' 

Global markets operated normally, with even the London Stock Exchange closing at its normal time. 

European Central Bank President Jean-Claude Trichet said he had discussed the situation with Federal Reserve Chairman Alan Greenspan and Bank of England head Mervyn King and concluded financial systems were working normally.  

"We are alert, we are vigilant,'' he told a news conference.  

Treasury Secretary John Snow added that the Bush Administration would keep close tabs on global markets. 

The Nasdaq Stock Market said it increased security efforts at its New York headquarters and its data center in Connecticut. A New York Stock Exchange spokesman said the Big Board does not comment on its security measures. 

In response to the attacks in London, investors sent biotechnology and biodefense shares higher. Human Genome Sciences Inc. gained 36 cents to $12.18, while Hollis-Eden Pharmaceuticals Inc. rose 34 cents to $7.90. 

Airline stocks dropped sharply, however, as investors feared further terrorist attacks. 

U.S.-traded shares of British Airways dropped $1.55 to $46.32, while American Airlines parent AMR Corp. was down 14 cents at $12.08 and Delta Air Lines Inc. lost 10 cents to $3.38. 

U.S. retailers reported very strong sales figures for June, a relief for a sector that struggled earlier in the year. 

Wal-Mart Stores Inc. added 13 cents to $49.51 after reporting solid monthly sales at stores open at least a year, while rival Target Corp., which saw a 9 percent jump in same-store sales and raised its second quarter profit forecasts, climbed 86 cents to $56.42. 

Advancing issues outnumbered decliners by more than 9 to 7 on the NYSE, where volume came to 1.15 billion shares, compared with 1.07 billion at the same point on Wednesday. 

The Russell 2000 index of smaller companies was up 1.03, or 0.2 percent, at 649.30. - AP 

Latest business news from AP-Wire 

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Next In Business News

Wall St drops as strong inflation data fuels rate hike bets
SC approves Yenher's plan to list on Main Board
Banks: Repayment aid continues to be made available
Malayan Cement buys YTL's cement biz for RM5.16b
Teladan Setia posts net profit of RM7.1mil in 1Q
Taiwan stock crash shows world dangers of too much leverage
Philippine cenbank holds rates at record low to support pandemic-hit economy
Kerjaya Prospek announces boardroom changes after takeover for E&O
Private equity firm to buy UDG Healthcare in US$3.7b deal
Zafrul: Keeping economy open during MCO 3.0 helps protect vulnerable, businesses

Stories You'll Enjoy