When Times Get Rough, New Yorkers Get Tough
Our Wall Street correspondent reports that with the cleanup in full swing and financial markets moving, analysts expect a good year
WALL Street is breathing easier after the arrest of Mohammed Salameh. "Like everyone else, we're just glad that law enforcement groups have arrested someone," says Hildegard Zagorski, an analyst with Prudential Securities Inc.
Workers in the office towers that make up "Wall Street" - offices incidentally that are located all over Manhattan - are quick to note that the bombing of the World Trade Center didn't stop the financial markets. It's not that professional traders are insensitive, but the financial markets have to keep operating.
Only about 40 of the Fortune 500 companies in the United States are based in New York. These are beefing up security. If terrorists think that US companies are somehow physically located in the Wall Street area, one longtime Wall Street observer notes, "they don't understand US capitalism - or New York City."
"What financial markets are most concerned about are such things as unemployment and employment statistics; what the Federal Reserve Board does about interest rates, and the well-being of the global economy," Ms. Zagorski says.
Some 350 companies in the Trade Center have been directly affected by the bombing. Many have relocated temporarily. Those most hurt have been the smaller businesses, particularly retail shops that pay extremely high rents to gain access to the 50,000 people who work in the Trade Center. Estimates for rebuilding now run between $700 million and $1 billion. The Trade Center itself is not expected to be fully back in operation until April 1.
As proof that Wall Street carries on, one need only look at market indexes. For the week ending March 6, the Dow Jones industrial average gained 33.l7 points, or 1 percent.
The bond market was jolted when the federal government released its unemployment report on Friday that showed a gain of 365,000 jobs on nonfarm payrolls for February. The unemployment rate fell a tenth of a point to 7 percent.
Bond traders said that the report showed that the US economy is growing far faster than many experts had thought, raising concerns about a renewal of inflation. But by the end of the day on Friday, the bond market calmed down with the yield on 30-year Treasury bonds remaining unchanged at 6.73 percent.
Many market professionals expect equities to continue to post gains this year. Peggy Farley, who is managing director and chief executive officer of AMAS Securities Inc., an investment advisory firm with over $200 million in assets, says that the Dow could reach 3,600 points this year.
After a year of huge losses caused by two hurricanes and lots of flooding, large insurers will take another hit from the Trade Center bombing.
Corporate relocators, emergency services providers, and security firms are looking for what they can find of a silver lining. Though Trade Center tenants will not have to pay rent, the Port Authority of New York and New Jersey will not lose its income either, with insurance companies picking up the tab.