Richard Drew  /  AP
Trader Adam Heckendorn, center, watches the board as he works on the floor of the New York Stock Exchange Thursday. Wall Street had a muted reaction to a series of deadly explosions in central London. news services
updated 7/8/2005 7:13:48 AM ET 2005-07-08T11:13:48

Wall Street closed Thursday with modest gains, as U.S. financial markets bounced back from an early sell-off that followed news of a series of deadly subway and bus explosions in central London .

Wall Street’s fairly muted reaction to the bombings was attributed to a perception that the attacks would not cause any major damage to the global economic outlook . In particular, U.S. investors remembered that stocks bounced back after similar attacks, such as the Madrid train bombings last year.

“People have come away from this saying it didn’t really affect any of the infrastructure of the financial markets,” said Todd Clark, head of listed trading at Wells Fargo Securities, in San Francisco. “It’s pretty much unlikely to affect the economy in any way.”

U.S. stock indexes fell sharply at Thursday’s open, with the Dow Jones industrial average dropping as much as 95 points in the first 15 minutes of trading. But the sell-off was not as steep as expected, and traders said the timing of the London attacks, several hours before the start of trading in New York, allowed investors to overcome any knee-jerk reactions.

“Unfortunately, this is the world we live in now. Five years ago, the market would have been down much more. Now, we see it as a buying opportunity,” Jay Suskind, head trader at Ryan Beck & Co., noted. “There’s no panic,” he said.

Kim Fennebresque, CEO of investment bank SG Cowen, told CNBC that the explosions, while a terrible act, will not have a long-term impact on the U.S. financial markets or the economy.

“From a market perspective, there will be the usual assessment of the market impact on travel, lodging and oil prices, but I think sadly we have become used to this, and longer term the impact here will be none,” he said. “In time, this will pass into memory and the market will start to look at earning numbers instead.”

Rush hour explosions
The near simultaneous explosions, which rocked the London transportation system in Thursday morning’s rush hour and killed scores of commuters, rattled Europe’s major market averages . U.S. bond prices rose in response to the explosions, which Prime Minister Tony Blair labeled a terrorist attack. In Japan, where the markets closed before the London attacks occurred, the Nikkei average fell 0.1 percent.

A sharp drop in crude oil prices helped to mitigate the early losses on Wall Street. And many investors, while wary, took heart after the homeland security secretary said there was no “specific credible evidence” of a pending attack in the United States.

In New York City, the Nasdaq Stock Market said it increased its security efforts at its New York headquarters and its data center in Connecticut. A New York Stock Exchange spokesman said the Big Board does not comment on its security measures.

U.S. Treasury Secretary John Snow spoke with Federal Reserve chief Alan Greenspan and other top U.S. officials about how global and U.S. financial markets were reacting to Thursday’s deadly blasts in London, a spokesman said.

Major Market Indices

Treasury spokesman Tony Fratto, speaking to reporters during a visit by the Treasury chief in Omaha, Nebraska, said Snow talked to Greenspan, New York Stock Exchange Chief Executive John Thain and acting Securities and Exchange Commission head Cynthia Glassman to make sure they were not seeing any anomalies.

Biotech, biodefense higher
In response to the attacks in London, investors sent biotechnology and biodefense shares higher. Human Genome Sciences Inc. gained 36 cents to $12.18, while Hollis-Eden Pharmaceuticals Inc. rose 34 cents to $7.90.

Airline stocks dropped sharply, however, as investors feared further terrorist attacks. U.S.-traded shares of British Airways dropped $1.55 to $46.32, while American Airlines parent AMR Corp. was down 14 cents at $12.08. Delta Air Lines Inc. fell 10 cents to $3.38.

U.S. retailers reported very strong sales figures for June , a relief for a sector that struggled earlier in the year. Wal-Mart Stores Inc. rose 13 cents to $49.51 after reporting solid monthly sales at stores open at least a year, while rival Target Corp., which saw a 9 percent jump in same-store sales and raised its second quarter profit forecasts, climbed 86 cents to $56.42.

Charles Schwab Corp. rose 70 cents to $12.68 after the company said it was not for sale and would remain independent. The brokerage was seen as a takeover target after the recent merger of Ameritrade Holding Corp. and online broker TD Waterhouse.

Investors bought up bonds, always seen as a safer investment than stocks. The yield on the 10-year Treasury note fell to 4.04 from 4.07 percent late Wednesday. Gold prices, another traditional safe haven for investors, also rose.

The dollar hit a 14-month high against the British pound after the explosions, but fell against the euro and was mixed against other major currencies.

Crude oil futures fell sharply after the Energy Department reported a drawdown of 3.6 million barrels of crude from the nation’s petroleum reserves. Gasoline reserves also fell, but heating oil and other distillate reserves were up sharply.

The Associated Press and Reuters contributed to this report.


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