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Most
stock market indexes continued to decline in August and
received no relief on August 21, when the Fed met and did
in fact lower short-term interest rates 1/4 %.
Fed easing usually has given an upward jolt to the stock
market, as investors usually view lower interest rates as
an elixir to boost corporate profits. However,
the Fed's cut on August 21, cooled investors, choosing
instead to focus on the continuing
decline in the U.S. and global economies, the worst in
ten years.
August ended with most major stock market indexes on a free
fall, as hopes faded for a "summer rally". Every stock
market rally was short-lived as the "Bears" on Wall Street
regained the upper-hand and as such, most stock market indexes
drifted down towards their 52 week lows.
September began with most major stock market indexes continuing
their free fall. The earnings and economic news depicted
the U.S. economy deteriorating along with the implosion
of corporate profits, with many companies disclosing large
losses.
September 11th was the day that terrorists attacked
and destroyed the two towers of the World Trade Center in
New York City, and damaged the Pentagon Building in Washington,
D.C. The human toll was more than five thousand fatalities.
The economic toll that will be
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felt
for a long time to come was initiated by the closing of
all the stock market exchanges for the four remaining days
that week. In addition, the airline and travel industry
was brought to a standstill, as the Federal Government halted
all airline traffic for several days following the terrorists
attacks.
The stock market reopened on Monday September 17th.
On the positive side, all the major stock market exchanges
executed the buy and sell orders that they received from
investors flawlessly, with record breaking volume.
On the negative side, all the major stock market indexes
fell precipitously when the stock market opened, even though
the Federal Reserve (Fed) lowered short-term interest rates
1/2 % on that day. The Fed's actions, which was
not expected until their regular meeting on October 2nd,
would have usually helped the stock market, this time it
didn't.
The stock market continued to decline throughout the trading
week. Investors remained spooked as to the continuing decline
of the U.S. and global economies, especially the Airline
sector, that was decimated by investors, projecting many
bankruptcies ahead as travelers cancelled their reservations,
fearing another hijacking.
The U.S. and global economies were contracting long
before the terrorists attacked, which will certainly, at
best, slow the U.S. and
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