But the markets traditionally get a boost when the nation takes military action. Wall Street analysts say investors are skittish about whether the bombing will provoke more terrorist attacks. Investors are also worried that more assaults that could badly shake consumer confidence. Moreover, today’s tempered pullback followed a rally last week that followed the Federal Reserve’s ninth cut in interest rates this year. So a sell-off might have been expected even without the military action.
“The market ordinarily goes up when Uncle Sam stands tall and goes after evilness,” says Alfred Goldman, the chief market strategist for A.G. Edwards. This time was different, Goldman and other analysts say, because of the uncertainty surrounding the war on terrorism.
“We’re battling an idea, rather than a specific country,” Goldman said, “and the fear of another terrorist attacks is the sword of Damocles that hangs over the investment community.”
After steep declines following the Sept. 11 terrorist attacks, the markets have lately seen a significant rebound: The Dow has regained 66 percent of its loss and last week the Nasdaq jumped 7.1 percent.
“We’ve come back a long way,” Goldman said, who predicted that the markets would climb over the long haul. “Investors are starting to recover.”
