At least in financial circles, Sept. 11 will forever be famous for more than being the birthday of D.H. Lawrence, Ferdinand Marcos and Dallas Cowboy Coach Tom Landry. Shocking investors both here and abroad, the Dow Jones industrial average nose-dived 86.6l points last Thursday, the largest one-day drop in the history of the New York Stock Exchange. Bond prices also fell, although not so sharply, amid renewed market worries that the U.S. economy was about to face higher interest rates and increased inflation.
The big Thursday drop "shell-shocked" Houston Accountant Jerry Anhalt and hundreds of others in the financial community around the U.S. and kept Wall Street bartenders busy long after the close of trading. "So many people bailed out we couldn't keep track of what was happening," said one Big Board broker. "They would scream 'Sell everything!' before you could say hello on the phone." Not even the New York Stock Exchange computers could keep up with the activity, and transactions were running 30 minutes behind at noon.
Less than a week before, the four-year-old bull market had hit a new Dow peak of 1919.71. But that made stocks increasingly vulnerable to a long- dreaded deep "correction." Once the slide started last Thursday, it picked up incredible speed because of so-called program trading -- computer- triggered waves of selling. By 11 a.m., the Dow had sunk almost 30 points. "It was remarkable," said Marvin Breen, a trader for Merrill Lynch. "I looked up at the screen, and it was down 20 points. Five minutes later it was down 30. Five minutes later it was down 40. It just kept dropping." Breen's account was only somewhat exaggerated: by 2:30 p.m., the Dow's plunge had passed its earlier one-day record drop of 62, set in July, and had sunk to 74.
Caught unawares, brokers were at a loss as to what to tell clients, if clients would listen at all. "This is just sheer crazy," said Arthur Randall, a broker with E.F. Hutton. "You try to be cool and counsel patience. But what do you tell a client when in the course of the minute he's been on the phone with you the Dow has fallen 20 points?" Said Alan Klein, an investment-minded dentist from Roslyn Heights, N.Y.: "It was like a two-day root canal without anesthetic. You find me a patient who can keep cool under those conditions, I will find you an investor who can keep cool in this market."
People were frightened, and not just about stocks. Said Eric Fessler, a loan officer at Kadilac Funding, a mortgage and personal-finance institution in Carle Place, N.Y.: "I got flooded with so many calls I could not work. Half wanted to know whether interest rates will now shoot to the heavens. Another half wanted to know if the depression was coming."
At day's end traders, their neckties askew, craned toward banks of screens where blinking green numbers showed that the Big Board had struggled through the busiest day in its history. While the Dow was taking its 86.61-point dive, to 1792.89, trading volume on the New York Exchange hit 237.6 million shares, surpassing the previous record of 236.5 million reached on Aug. 3, 1984.