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CNN Live At Daybreak

America's New War: Markets Plummeting

Aired September 20, 2001 - 09:52   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAUN, CNN ANCHOR: Well, if you are an investor it probably comes to no surprise, as you know, Wall Street, of course, has that taken a direct hit of its own since Monday. The market staged late- day comeback yesterday but still ended lower. It's been a very tough week. And when trading resumed in less than an hour, investors and analysts expect another big sell-off. Futures are down again.

"Fortune" magazine's Andy Serwer is here now.

So the overseas markets got killed?

ANDREW SERWER, "FORTUNE" MAGAZINE: Yes, absolutely. Not good news to report on the economic front of this new war. Just to get you up to speed a little bit here, the phrase I keep hearing over and over, yesterday and this morning, is "chain reaction." There's a chain reaction going through the economy, Paula, in terms of the companies announcing problems. We all know about airlines and hotels, now we're hearing about problems in the technology sector, Eastman Kodak, LMVH, the French luxury goods maker is preannouncing, and then there are the layoffs that come from that.

There's a chain reaction that sort of took place yesterday on Wall Street as companies announced the stocks were sold off there, there was margin selling by investors who borrowed money to buy stocks, there was selling by insurers who needed to raise money.

Things looked really gloomy midday yesterday with the Dow down about 400 point. Stocks did come back a little bit, though, when we announced about some military movements. Ironically, that seems to actually be good for stocks in these types of environments.

But overseas markets, Asia very weak, down two or three percent, trading in Europe is down two or three percent too. And for the first time yesterday in all this I really felt a sense of, I wouldn't say panic, but real fear, Paula, on Wall Street, some real fear selling. And I guess it's understandable. When we saw the market down a lot on Monday and then sort of flat on Tuesday, I didn't think we were out of the woods yet.

ZAUN: That's not a very good thing to hear for a lot of Americans out there who have their retirement savings, basically, wrapped up in 401(k)s and watching the value of that portfolio go down, down, down.

SERWER: Absolutely.

ZAUN: I hope you are wrong, Andy.

SERWER: I do, too. I'm sorry to be doom and gloom, but now a lot of great stuff to report right now.

ZAUN: All right, thanks so much.

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