The attack 9/11 was the generation’s Pearl Harbor and caused ripple effects that included America’s involvement in two wars, markets to suffer, travel and tourism to decline and led to America adding security measures to attempt to ensure that a similar attack will never again occur on American soil.
Stock prices are indicative of how optimistic individuals feel about the future. Terrorism disrupts the stock market by causing panic, and pessimism, as people decide, in droves, that their money is better off in a more secure institution or investment (Chen &. Siems, 2004, p. 349). Chen &. Siems (2004) researched the impact of 9/11 on world markets, in comparison to other historical terrorists events that have occurred worldwide, including the sinking of the Lusitania, the bombing of Pearl Harbor, the invasion of France, different airline bombings, the invasion of Kuwait, the World Trade Center bombing and the Oklahoma City bombing. 9/11 had the potential for a large impact on world markets, not just because of fear, but because the world trade infrastructure was disrupted because of the destruction of the twin towers (Johnston &. Nedelescu, 2005, p. 5).
What they found was that, while there was a significant negative impact on the stock market for 9/11, in that it stocks were off almost 8%, compared to almost 3% for Pearl Harbor, less than 2% for the invasion of Kuwait, and an increase of almost 2% for Oklahoma City, the stocks rallied much faster than many of the other events listed. For instance, the stocks did not rally after Pearl Harbor for 232 days, after the invasion of Kuwait there was not a recovery for 134 days, and, after the invasion of France, stocks did not recover for over 2 ½ years (Chen &. Siems, 2004, p. 354). What they also found was that all 34 world markets that they examined had a negative market impact on the day of the tragedy, with 94% experiencing almost an almost .01% decline, and Helsinki and Austria experienced a .10% decline (Chen &. Siems, 2004, p. 358). However, after 11 days, almost all of the markets had recovered, and that 82% of world markets fully rebounded within 60 days after the attack (Chen &. Siems, 2004, p. . 360).