Airline stocks drop on news of bomb plot
Airline and other travel-related stocks dropped this morning after news of a plot to bomb transoceanic planesheaded from the United Kingdom to the United States.
Long security lines at London and U.S. airports caused flight delays and some cancellations. The Dow Jones fell 1.14 percent during the first hour of trading, and most European markets closed down as well.
"A negative reaction is expected but somewhat contained," said Anthony Chan, a senior economist at JPMorgan Fleming Asset Management.
British authorities said that the terrorists had focused their efforts on three major U.S. carriers, United Airlines, American Airlines, and Continental Airlines. The shares of those companies fell heavily in morning trading and continued to decline when U.S. markets opened. European airlines also felt the tremors. The stock of British Airways, which canceled all short-haul flights out of Heathrow and some out of London Gatwick because of delays, dropped as much as 28 percent.
The overall market won't panic based on the information so far from the investigation, Chan said. The fact that authorities had been monitoring the situation for some time and had caught the terrorists before they could act shows that "the world is on top of this," he said. "That should be viewed from a longer-term reaction as a positive thing, because we're not catching them as they walk through the security gate."