With a new spate of terror warnings aimed at New York, Wall Street was a nervous place to be yesterday, with investors poised to sell at the first hint of trouble.
The mood of anxiety was heightened by late night warnings from the FBI on Tuesday that the Brooklyn Bridge and the Statue of Liberty might be targeted.
Both are close to the financial district. The Brooklyn Bridge was closed by a bomb scare for an hour in the morning.
Security is visibly higher on bridges and tunnels leading to downtown Manhattan. Military helicopters have been flying up and down the Hudson for the last few days.
Yesterday the US navy sailed past ground zero in a stately procession of 19 ships including four destroyers and an aircraft carrier for the 15th annual fleet week in New York. Some 6,000 US marines saluted as they passed the site of the twin towers of the World Trade Centre.
The terror warnings were passed to the joint terrorism task force in New York, which includes the New York City Police Department. Police Commissioner Raymond Kelly said his department was "taking all necessary precautions".
The stock market, already depressed by weak profits, doubts about the strength of the economic recovery, and accountancy and investment scandals, is now grappling with the added risks associated with terror, as well as the prospect of an India-Pakistan war.
Stocks appeared to be rebounding strongly last week but by yesterday the Nasdaq composite had given back more than half of last week's 8.8 per cent gain.
The Dow Jones Industrial Average suffered triple-digit losses on the first two days trading this week. But by the close last night, the Dow Jones had recovered to 10,157.88, up 52.17.
The stock fall was blamed on a negative news cycle that began when Vice-President Dick Cheney warned at the weekend that future attacks were "inevitable". "The decline certainly has some of its roots in renewed talk of terror," says Mr Jim Paulsen, equity strategist at Wells Capital Management. "A terror threat increases uncertainty and damages investor confidence," said strategist Mr Chris Wolfe at JP Morgan Chase.
