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Terror Threats Affect Stocks

News of fresh terror threats against the U.S. and Britain sent jitters to the market as U.S. stocks traded lower toward the end of the week. The Dow Jones Industrial Average (DJIA) was down 19 points, at 11,056 not long after Thursday`s opening bell. The S&P 500 was down 4 points at 1,261 and the Nasdaq Composite was down 10 points at 2,050. But industry analysts said the news of British authorities thwarting a plot to blow-up air crafts in mid-flight was not the only concern of investors.

The decision Tuesday by the Federal Reserve to pause key interest rates was viewed by many as a sign of weakening U.S. economy. Analysts say that industry experts believe the market`s attention was suddenly turned to the reports from the U.K. on Thursday, where local police arrested 21 people in connection with the failed plan to blow-up air planes bound to the U.S. from Britain. But the market`s main problem is the weak prospects in the economy.

Michael Metz, chief investment officer at Oppenheimer Funds, said this new terror threat will not linger in the minds of investors. "I don`t think it will have any long-term impact, although it could give us a short-term sell-off." Metz said the market`s focus "is on how weak the economy will get and not on when the Fed will stop." "The weakness in the transportation index foreshadows serious weakness." Since Tuesday, the market has been trading lower than usual when the Fed decision came out, triggering fears of a slowing economy.