(Updated from 4:33 p.m. EDT)
The Dow Jones Industrial Average suffered its worst point decline in history Monday as the widely anticipated selloff dragged stocks to three-year lows on Wall Street Monday.
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A record 2.36 billion shares were traded on the
in the first trading session since the terrorist attacks on the World Trade Center and the Pentagon Tuesday. Trading was orderly and without serious technical problems -- a big victory for the exchanges. But the selloff came despite a
surprise interest-rate cut by the
. The Fed cut the closely watched fed funds rate to 3% from 3.5%. Europe's central bank also eased.
The Nasdaq Composite closed off 116 points, or 6.8%, to 1579. The Dow shed 684 points, or 7.1%, to 8920. The S&P 500, meanwhile, fell 53 points, or 4.9%, to 1038. All three indices were at their lowest levels since late 1998. But while the Dow's fall was steep, it wasn't among its 10 worst on a percentage basis. Decliners outpaced advancers 4-to-1 on both the NYSE and Nasdaq.
Stocks fell sharply at the open but stabilized by midday as a wave of "patriotic" buying kicked in. They picked up more downward momentum at about 1:30 p.m. after a profit warning by United Technologies. Volume was extremely heavy.
"I expect that the market will stabilize just as it did abroad. I think what we're seeing is a lot of institutions squaring their global trading book," said Harry Milling, a markets and financials analyst at Morningstar. "It will take some time for the rate cuts to work through the system and a recovery depends on what kind of retaliation we see. We don't know what kind of effect that will have on the economy."
It took about an hour to open every component in the Dow Jones Industrial Average, the last being American Express (AXP) - Get Report, which has operations in a building near the scene of the attack. It finished 13.6% lower at $30.25.
Insurance and airline stocks were hard hit, as expected. Big losses of life and property in the attacks were expected to result in up to $30 billion in claims payments for the insurance industry. Several airlines, meanwhile, have announced plans to cut back their flight frequencies and lay off workers and some fear there may be a wave of bankruptcies in the industry.
American International Group
shares were recently falling 4.3% to $71.00,
was falling 12.6% to $71.61 and
was losing 13.6% to $28.51.
American Airlines parent
was falling 39.3% to $18.00;
was falling 52% to $5.57 and United Airlines parent
was down 43.2% to $17.50.
The dollar was lower despite Japanese government intervention to support it, falling to a six-month low as fear spread that the economy was headed into a recession. The dollar fell as low as $0.9331 a euro, from $0.9202 Friday, but recovered to $0.9237. It also slid against the yen, changing hands 117.31 yen per dollar, from 117.35 Friday.
U.S. Treasuries were lower on inflation worries stemming from the rate cuts and supply pressure from insurance companies that might need money to fund claims.
Crude oil also dropped on news that the OPEC said it would be willing to accept lower prices to help the U.S. economy recover from the attacks in New York Washington and elsewhere. Crude for October delivery dropped by as much as 4.2 %, to $28.30 a barrel, on the New York Mercantile Exchange. It was recently trading at $29.10.
One stock was posting a stratospheric rise: Bomb-detection equipment maker InVision Technologies (INVN) soared 165% to $8.25.