WTC Crashes Shake Financial World
Following the crashes of the two planes into the World Trade Center Tuesday morning, exchange and stock markets across the world plummeted into freefall. By mid-afternoon, NASDAQ, NYSE, the American Stock Exchange and the New York Mercantile Exchange had closed. Outside of New York, the Chicago Board of Trade and the Toronto Stock Exchange also suspended trading.
Due to the interdependence of world economies, North American trading exchanges were not the only ones affected; major European exchanges in London, Paris and Germany suffered significant drops as well. The drops are already being regarded as the worst to hit world markets since 1987, with gains Tuesday seen only in energy stocks, gold and the Swiss franc.
Despite uncertainty regarding responsibility for the terrorist attacks, fears that an oil shortage would result if the crashes were linked to the Middle East resulted in increased oil prices in world markets.
It will most likely be several days before Wall Street reopens, due not only to the physical damage suffered by the firms located at the explosion sites, but because of the emotional wreckage its employees are coping with. Given the swift drop in market activity rapidly following the crashes, its close served also as a preventive measure.
"The Federal Reserve System is open and operating. The discount window is available to meet liquidity needs," stated reserve officials in a release similar to one issued during the 1987 stock crisis, the last time the market was in such danger.
Hoping to avert widespread panic and bank shortages, the Federal Reserve has also made it clear that they will provide additional funds to banks if necessary.
Beyond the large-scale problems with worldwide markets and stock exchanges, concern extends to the impact of the damage done by the crashes on insurers. AOL News reported that some of the hardest hit members of the commercial sector are insurance and reinsurance companies.