Wall St report: Wedneday close

WORRIES over what is ahead erased an 'I'll show you' rally as Americans looked back on the anniversary of the terrorist attacks on Washington and New York and the downing of a commercial jet in Pennsylvania.

The Dow Jones Industrial Average, which started the day 10% lower than where it stood on 10 September 2001, rose as much as 120 points before closing the day down 21.44 points or 0.3% to 8581.17. The Nasdaq eased 4.64 points or 0.4% to 1315.45 to add to the 22% in losses over the last 12 months.

In early trading, the emphasis appeared to be on showing the world that New York would not be cowed by terrorism. 'Trading will undoubtedly be very quiet today, but New Yorkers being New Yorkers, traders will probably want to stick a thumb in the eye of terrorism and so will take prices higher,' said Richard Dickson, chief technical strategist with investment firm Hilliard Lyons, in a pre-opening note to clients.

But factors more important to the economy of the US weighed more on investor psychology as the day wore on, as experts debated just how big a role the attacks had played in the market decline since last September.

Market historian Jeremy Siegel, of the University of Pennsylvania's Wharton School of Business, said the terrorist attacks were not the main reason the markets had fallen in the year since. 'I think the markets would be about where they are now if the attacks had not taken place,' he said, citing the struggling US economy and declining confidence in corporate American leadership.

A hint of the economy's woes came from the Federal Reserve Board, America's central bank, in its quarterly survey of the nation's health, or 'Beige Book.' 'The growth of economic activity has slowed in recent weeks, with a good deal of variation across sectors,' the Fed's report said. 'Most districts indicated slow and uneven economic growth, with mixed or scattered experiences across sectors of the economy.'

These sentiments are likely to be echoed in Fed chairman Alan Greenspan's testimony before Congress today (Thursday). Another potentially market-moving event will be a speech to the United Nations by President George Bush, who is expected to make the case for a military attack on Iraq.

But those concerns were pushed aside in early trading as markets resumed after an opening delayed to accommodate various memorial ceremonies.

In an unusual alignment of unity, all 30 components of the Dow Industrial Average were higher at the opening bell, but those gains evaporated. Beaten-down financials and telecoms which had moved higher at the opening were in retreat by the close. JP MorganChase closed down 17 cents or 0.7% to $22.98 and AT&T lost all of its early advance to finish the day virtually flat at $12.68.

Diversified manufacturer Honeywell proved a big drag on the Dow, tumbling $1.68 or 5.6% to $28.52 on worries over its exposure to asbestos liability claims.

Even oil shares failed to hold their ground, despite jitters building over an attack on Iraq. Oil giant ExxonMobil was marked down 19 cents or 0.6% to $34.60.

Not all all the news was negative. US shares in hammered mobile phone maker Nokia managed to gain 74 cents or 5.3% to $14.61 after broker Merrill Lynch had positive things to say about it. Conglomerate Tyco International, dogged by questions over its executive leadership, jumped $1.90 or 12% to $17.80 after it hired a new chief financial officer.