Wall Street shrugged off the federal government's latest terror warning Monday, with most financial services stocks showing only muted losses in early trading.
One day after the government warned that al Qaeda may be targeting banks and monetary institutions in New York, Washington and Newark, N.J., the action in the stock market was calm, with most of the selling occurring in tech shares. The
Dow Jones Industrial Average
was virtually unchanged at 10,138.
Financial stocks were little moved, despite the government's warning that terrorists are setting their sights on buildings owned by
, as well as the
and the International Money Fund in Washington. The Philadelphia Bank Index was down a half-percent, while the Amex Broker Dealer Index fell a little under 1%.
With machine-gun-toting police and bomb-sniffing dogs now a familiar sight outside the NYSE, many traders and investors took the warning in stride. At the corner of Broad and Wall Streets in lower Manhattan, tourists continued to snap photos of the stock exchange building, as if it were just another summer day in the big city.
"The good things about these warnings is it means nothing is probably going to happen," says Timothy Ghriskey, president of Solaris Capital, a Connecticut-based hedge fund. "A key part of terrorism is surprise."
Not surprisingly, shares of Citigroup and Prudential felt pressure in light of the warning. Citigroup dropped 48 cents, or 1.1%, to $43.61, while Prudential fell 56 cents, or 1.2%, to $46.
Officials from both Citigroup and Prudential were unavailable for comment on the threats. But local authorities took steps to protect both buildings. In Newark, police closed off two streets by Prudential's headquarters and erected a metal fence around the building. Armed officers were seen patroling outside Citigroup's mid-Manhattan office tower.
Neither Citigroup nor Prudential was the hardest-hit financial stock of the day. That honor went to
Van Der Moolen
, the two publicly traded NYSE specialist firms. Shares of LaBranche were down 24 cents, or 2.9%, to $7.95, while Van Der Moolen declined 17 cents, or 2.7%, to $6.24.
That selling had little to do with terror paranoia. Rather, the culprit was an NYSE plan to make it easier for investors to trade Big Board stocks electronically. Big Board officials were expected to unveil the proposal, which would cut into the profits of specialists firms, later in the day.
financials would have taken a bigger hit, but maybe the government gives people less credit than they deserve," says Michael Stead, a financial services portfolio manger with Wells Capital Management.
In fact, some traders may have been disappointed that the terror warning didn't spark more selling, in order to provide a buying opportunity in financials. Before the market opened, Ghriskey had predicted that any early selloff would probably bring bargain-hunters into the market by the afternoon.
Among other big financials,
fell 81 cents, or 1.6%, to $48.91;
Bank of America
lost 14 cents, or 0.2%, to $84.87;
fell 29 cents, or 0.8%, to $37.04;
dropped 70 cents, or 0.8%, to $87.49; and
dipped 56 cents, or 1.1%, to $48.77.