Wall Street's Deathly Silence

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A trader of Moscow-based brokerage Aton points toward the TV screen

Wall Street sat at home for the second straight day Wednesday with no word yet on when the financial heart of the U.S. would again be, in George W. Bush’s words Tuesday night, "open for business."

Meanwhile, Asian markets spent the night jabbing at the panic button. Japan’s Nikkei and Hong Kong’s Hang Seng indexes both slid below its 10,000 level — and that was with innumerable stocks bumping against government-imposed curbs. South Korea's market took the heaviest hit, with the benchmark Kospi sinking 12 percent. Markets in Australia and New Zealand both lost just over 4 percent. Singapore ended down 7.4 percent.

In Europe Wednesday, markets were open and bouncing back to their previously glum levels — Gold and oil pulled back from Tuesday's spikes, and London actually saw a small rally on health-care stocks — but in large part investors seemed in sympathy with their American counterparts and stayed on the sidelines, with volume extremely thin.

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Restraint like that is just like what Alan Greenspan (now making his way back to the U.S. from Switzerland) and the world’s central bankers are hoping for. Fearing panic — and that large dollar transactions could be lost in gaps in the infrastructure created by the World Trade Center disaster — the Federal Reserve requested Wednesday that central banks overseas limit the trading of dollars in the next few days while it copes with money supply issues. Indeed, dollar/yen trading Wednesday was limited and benign.

The last two-day close on Wall Street was following the JFK assassination; the last time longer than that was the four-day "bank holiday" in panicked 1930 and another, longer stretch during WWI. At about the time Wall Street’s closing bell would normally have rung Wednesday, exchange officials announced that some trading would resume Thursday, but that the equities markets would be open as early as Friday.

But that seems unlikely, if only for logistical reasons; lower Manhattan is still a disaster area, and the idea of a community of traders arriving at the New York Stock Exchange to take their usual place under the Big Board while rescue workers sift through the rubble for bodies is faintly ludicrous at this point.

Unlikely, and quite possibly unwise. Certainly a significant selloff awaits the Dow and NASDAQ whenever they reopen, and a significant selloff is certainly warranted, considering the real impact of the catastrophes on industries like insurance, airlines and financial services, to name but a few. (One early estimate by Moody’s has the damage bill at $10-15 billion.)

The concern is that such selling be rational and not out of panic. Central banks have promised to make available as much liquidity to fellow banks as is necessary to keep the system functioning, and many expect a half-point Fed cut to aid that effort in the coming days. But with the damage so close to home, giving investors and traders a few extra days to grasp the long-term impact of this disaster may be helpful in avoiding a panic-induced rupture.

In a marketplace that trades $50 billion of stocks every session, the turn-of-the-century days when a man like J.P. Morgan could open his wallet and singlehandedly keep a floor under the market are probably gone forever. There has been some talk of a buying show of patriotism from investors and traders, but no one can say with any finality what the financial-services herd will do when it is released back into its natural environment. One thing is certain: This time, stability — or some semblance of it — will have to be a group effort.