Is History Repeating?

Chart of the Week for October 5-11, 2001

Following the terrorist attacks, many reports highlighted the market’s reaction to previous crisis events. Historically, equity markets initially drop and then tend to recover and return to previous levels. As expected, when trading resumed on September 17th, the S&P 500 Index quickly fell to lower levels as economic uncertainty and emotional trauma drove prices down. Then, as investors reassessed the September 11th effects, prices reversed course and have now recouped most of their losses. At its lowest point, the S&P 500 was down 11.6% from its pre-attack close. As of yesterday, October 4, the S&P 500 had recovered considerably and was off 2.1% its pre-attack level.

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