The Federal Reserve cut the federal-funds rate by another half-point to 3 percent, the lowest level in nine years in an aim to keep the economy from falling into a recession after the worst terrorist attack in US history. It was the eighth change this year to the federal-funds rate, the interest that banks charge one another, and came after an emergency conference call among Fed policymakers two hours before Wall Street opened for the first time since the attack. The Fed also cut to 2.5 percent the discount rate, which it charges on loans to banks. (Story, page 1.)
Still, some investors sent stocks falling sharply as trading resumed for the first time since the terrorist attacks on the Trade Center and Pentagon. Within minutes, the Dow Jones Industrial Average dropped more than 500 points. But as the Monitor went to press, markets appeared to stabilize somewhat as financial leaders appealed to investors' patriotism to avoid a big selloff. Treasury Secretary Paul O'Neill said despite an initial fall, an economic rebound lay ahead. Above, trader Alex Maio (r.) puts a US flag on the New York Stock Exchange trading floor.
Airline stocks took the hardest hit when markets first opened, with shares of United plunging 40 percent. Stocks of other major carriers and travel-related companies also fell sharply. Airlines say they've lost $1 billion in the past week because of reduced demand, the aviation shutdown, and higher expenses from new security measures.
In addition to Wall Street, much of lower Manhattan also opened for business, even as smoke drifted from the rubble of the World Trade Center. Police were checking identification, however, and national guardsmen patrolled street corners. Court houses and other government buildings also reopened.
The Bush administration reiterated its demand that Afghan- istan's ruling Taliban hand over Osama bin Laden or face the US's "full wrath." Brushing off bin Laden's denials of responsibility for the attacks, the president and his aides sought to draw a line between nations that are allies and those that are targets. Meanwhile, Defense Secretary Rumsfeld said the US had received "overwhelming support" globally in its fight to stamp out terrorism and called any ultimate retaliation "self-defense." He also said he'd seek broader authority from Congress to fight terrorism, including the use of "unconventional" military tactics. (Story, page 1.)
Pilots were put on alert at 26 Air Force bases and jets were patrolling over some cities. In addition, two US warships left their home port in Yokosuka, Japan, for a destination and a mission that the Navy would not reveal. Meanwhile, the US asked the International Atomic Energy Agency to tighten controls on "special nuclear materials and the facilities that produce them."