Published January 13, 2015
U.S. stock markets on Friday shrugged off a threat against the New York City subway system, providing the latest evidence of how inured equity investors have grown to security menaces.
In the year following the Sept. 11, 2001, attacks the market was often roiled by threats at home and abroad, and in the early days of the Iraqi insurgency, stocks were prone to wobble with each report of a roadside explosion.
But even major surprise events since have had little negative effect on U.S. share prices and, in the few instances when they have, nothing has been longlived.
On July 7 when explosions rocked the London subway system, killing more than 50 people, the Standard & Poor's 500 index (search), the U.S. market's most broadly watched barometer for stocks, ended up 0.25 percent. And while the S&P tumbled 1.5 percent on March 11, 2004, when a group linked to Al-Qaeda set off four explosions in Madrid, killing 191, the index rebounded by 1.25 percent the next day ended the month more than 2 percent higher.
More recently, the index was showed little reaction on October 3, after a weekend suicide attack in Bali, Indonesia, that killed 26 people.
"It's horrible to say, but there's a certain numbness," said Daniel Verna, vice-president for trading at brokerage-firm Adam Harkness in Boston. "Maybe, if these attacks had happened right after Sept. 11, or worse, if the threats against New York materialize, then we would have seen a bigger impact."
Investors were more focused on a Labor Department report that showed fewer-than-expected jobs were lost last month in the disruptions caused by Hurricane Katrina (search).
The Dow Jones industrial average (search) gained 5.21 points, or 0.05 percent, to end at 10,292.31. The S&P advanced 4.41 points, or 0.37 percent, to finish at 1,195.90. The technology-laced Nasdaq Composite Index (search) rose 6.27 points, or 0.30 percent, to close at 2,090.35.
But some of that relaxed response may owe more to the lack of clarity about the source of the scare than about nonchalance to security threats in general.
"It's not that we don't care, but at least in this case about the New York subway, all we have is some dated and scattered information, coming from somewhere in the Middle East, that something bad might happen," said Barry Ritholtz, chief market strategist at the Maxim Group, with $5 billion in assets.