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Markets mostly unfazed by terror plot

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MARK AUSTIN THOMAS: The UK says the threat level today remains "critical"— that's its highest level. In London and here in the US, it's another day of long lines and security checks for people traveling internationally. The Bank of England published the names and addresses of 19 suspects and has frozen their assets. News of the planned terrorist attack didn't prompt the predictable response from Wall Street. Usually nervous investors shy away from stocks and move towards the safety of say, gold or utilities. Just the opposite happened yesterday. Marketplace's Jeff Tyler explains.


JEFF TYLER: Standard & Poor's chief investment strategist Sam Stovall has examined trading patterns in the wake of four terrorist attacks.

After 9/11 in New York, he says, stocks recovered losses within a few weeks. After the Madrid bombings in 2004, the recovery only took a few days.

SAM STOVALL: "And then after the London bombing, we recovered prices within a matter of hours. This time around, we basically didn't even blink an eye."

Stovall is careful to make a distinction between the thwarted plot and those deadly attacks. But in the past, he says investors quickly returned to business as usual.

STOVALL:"The attacks bumped investors off of that trend for a short period, and they simply got back on track."

Is that why gold did poorly? Stovall says speculators may have stayed on the sidelines, having learned in the past that investors aren't so timid and any knee-jerk rush to gold would be modest, temporary, and not worth the effort.

I'm Jeff Tyler for Marketplace.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.

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