World Markets Plunge On U.S. Terrorist Attacks

World markets plunged Tuesday after a massive, coordinated terrorist attack with hijacked U.S. jetliners collapsed both towers of the World Trade Center in Manhattan and severely damaged the Pentagon in Northern Virginia.

Reports of attacks at the State Department and the U.S. Capitol in Washington were apparently unfounded. The Federal Aviation Administration closed all major U.S. airports and diverted foreign flights to Canada in the wake of the attacks.

The attacks occurred shortly before U.S. financial markets were set to open. All U.S. markets were closed at least through Wednesday, and there was speculation that they might not reopen until next week. Many of the country’s biggest financial firms are headquartered in the World Trade Center, and any disruption to the nation’s financial system could take time to sort out. For example, CNBC reported that 70% of world bond trades occurred through the World Trade Center. The Federal Reserve issued a statement saying that it will meet any liquidity needs; the Fed issued a similar statement after the 1987 crash to calm the markets. About 50,000 people were employed in the World Trade Center.

European markets were still open when the attacks occurred. The UK FTSE 100 fell 5.72% before closing early, France’s CAC 40 dropped 7.39% and Germany’s DAX plunged 8.5%. Bomb threats later shut down the German bourse. Latin American markets fell 5%-9%. Oil and gold shares rallied on news of the attacks, as investors feared Mideast tension and sought safety in gold. The U.S. dollar plunged. S&P 500 futures were trading about 12 points below fair value when the Chicago Mercantile Exchange closed a few minutes after the second World Trade Center attack.

Two planes crashed into the massive World Trade Center towers, the first at approximately 8:50 a.m. and the second about 18 minutes later. Both towers were being evacuated when the second plane hit. The second crash was caught on film, and it appeared to be deliberate. The tops of both towers were engulfed in flames after the crashes, and later completely collapsed like building demolitions.

About 9:40 a.m., a plane crashed into the side of the Pentagon, causing massive damage and some fatalities, and another plane later crashed about 80 miles south of Pittsburgh.

Four commercial jets, all believed to be hijacked, crashed. The two American Airlines jets were: Flight 11 from Boston to Los Angeles, which reportedly crashed into the South Tower of the World Trade Center; and Flight 77 from Dulles to Los Angeles, which crashed into the Pentagon. The two United Airlines jets were: Flight 93 from Newark to San Francisco, which crashed outside Pittsburgh; and Flight 175, from Boston to Los Angeles, which crashed into the North Tower of the World Trade Center.

The nearby New York Stock Exchange was evacuated because of the World Trade Center bombing and closed for the day. The Nasdaq had planned to open, but later announced that it would remain closed for the day.

An early rally based on a positive earnings pre-announcement from Nokia fell apart on the news, as index futures and foreign markets plunged.

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