*AP*
AP IMPACT: Another day -- hardly ordinary -- at NYSE
Saturday November 1, 9:02 pm ET
By Adam Geller, AP National Writer AP IMPACT: Hopes, fears collide in
another day -- hardly ordinary -- on NYSE's trading floor
NEW YORK (AP) -- By the time Jeffrey Frankel got to bed it was past
midnight, but sleep did not come easy. Twice during the night, the broker
had climbed out from the covers and returned to the television, trying to
get a read on what investors were thinking in Tokyo and Hong Kong and to see
what the futures market foretold about the trading day ahead.
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Now,
the digital board hanging over the New York Stock Exchange's maple hardwood
floor showed 9:24 a.m.
Six minutes left until the open.
But in one corner of the trading floor, brokers for Stuart Frankel & Co. had
been at their stations for more than 2 1/2 hours. Frankel, president of the
company founded by his father, had been on the floor since 8, working the
phones, swigging coffee, "trying to get ready for what seems to be getting
whacked in the head every day."
After weeks of riding the Wall Street whipsaw, this new day -- Wednesday,
Oct. 29 -- held out both reason for hope and the potential for even more
pain.
The previous session had ended with an adrenaline-pumping 889-point surge in
the Dow Jones industrial average. The gain was welcomed warily on the floor.
But it did little to clarify the doubts or ease the fears of the people
whose lives and livelihoods are staked to a market down 40 percent from a
year ago.
In minutes, the world's investors -- from millionaire hedge fund managers to
ordinary workers trying to protect decimated retirement savings -- would
turn their attention to this trading floor, studying the televised frenzy in
a search for reassurance and direction.
If they chose, they could look ahead to the promise of a cut in interest
rates, likely to be announced at midafternoon. But who could blame them for
looking back? This, after all, was the anniversary of the 1929 market crash,
perhaps the darkest day in exchange history.
There was only one certainty. This would not be an ordinary day on the
floor. There are no ordinary days here anymore.
The electronic board showed investors were betting on stocks to open near
the previous day's close, a good sign. Now it was up to Frankel and his
trading floor compatriots to figure out whether yesterday's brief
exhilaration signaled the edge of the oasis a parched Wall Street had been
searching for, or just a cruel mirage.
"That's the million-dollar question," Frankel said.
But for now the only answer was the sound of the opening bell.
9:39 a.m., Dow down 88.97.
Traders greet the bell with light applause. But it fades in seconds. Wall
Street has plenty to think about today and isn't wasting time on
formalities.
Just over an hour ago, it looked like stocks might start the day strong
after the Commerce Department reported that orders for products like cars
and appliances rose in September.
But that bit of good news doesn't appear to be enough for a market where
half of the stock drop has been compressed into just four weeks. After
Tuesday's big gain, some investors appear ready to claim a little profit,
and it's easy to understand why.
Standing at his booth, broker Theodore Weisberg cranes his neck, peering up
at the board. Weisberg sports a tie covered with silhouettes of the
Buttonwood Tree, under whose branches 24 traders founded the NYSE in 1792.
It's a souvenir of his four decades on the trading floor. But even with that
tenure, he acknowledges it's harder than ever to read the market.
"In times like this you need to be more of a psychologist than a trader," he
says, "because so much of stock trading is driven by human emotion."
Still, Weisberg likes what he sees. Citigroup stock is holding above $13 a
share, a good sign for banking companies beaten down by the financial
crisis. Just the fact that the overall market is sustaining most of
yesterday's gains is encouraging, he says.
Sure enough, 12 minutes later, and the Dow has narrowed its drop, down just
37. Still, even 40 years of trading can't tell Weisberg whether yesterday's
jump and today's steadiness is a sign that battered stocks have bottomed
out.
"Wall Street is the only business in the world where when they have a fire
sale nobody comes," he says. "And they don't come because they're scared to
death."
10:30 a.m., Dow up 52.09.
After some early fluctuation, traders and investors seem to be settling into
waiting mode.
At least part of the explanation for the previous day's rally is investors'
expectation that this afternoon the Federal Reserve will cut interest rates,
continuing its battle to save the financial system.
There's wide agreement that Fed Chairman Ben Bernanke and fellow
policymakers will cut a key rate by 0.5 percent to 1 percent. But until the
decision is announced at 2:15, investors seem uncertain whether to buy or
sell.
"It's been a very quiet morning, actually," says Jennifer Lee, a partner in
independent broker Mogavero Lee & Co.
The quiet, though, shouldn't be misread as calm. Most of Lee's clients are
mutual funds, state pension funds and hedge funds. And most remain wary of
the market, planning to buy eventually but for now mostly watching from the
sidelines.
"This is a very difficult market to predict, very difficult to trade," says
Doreen Mogavero, one of Lee's partners. "It's not historically like anything
we've seen before."
Mogavero believes, at least for this moment of this morning, that the
previous session's surge and the focus on the Fed is distracting investors,
lifting stocks in a way that may not be sustainable. Soon, she says, they'll
have to refocus on the long-term prospects for businesses and consumers. Her
doubts are confirmed by TV reports before she left this morning of fresh
rounds of layoffs by several large companies.
"When all is said and done and people start to look at the underlying
economy, that's what really tells a story," she says.
11:43 a.m., Dow up 2.47.
Seen on television, a day on the trading floor looks like one more repeat of
the same controlled chaos. But from trader's eye level, it becomes clear
neither is true.
What looks like a frenzy is actually remarkably organized. Under the gilded
tobacco leaf motif woven across the exchange's 50-foot ceiling, brokers work
the perimeter, fielding orders and gathering information for client
investors trying to read the market. In the middle of the room, specialists
work the trading posts, horseshoe-shaped counters decked in flat screen
monitors. Each specialist runs trading in five or six stocks.
In much the way they've done for decades, brokers and specialists converge
on the building at Wall and Broad streets each day, arriving in colored
mesh-back jackets with their nicknames embroidered on the front.
But only about 1,200 people work the floor now, down from 3,000 a few years
ago. Trading used to fill five rooms. Today, it's down to two -- the main
floor and the adjacent Garage, rumored to be the site of a long-ago horse
stable.
Traders whose jobs were eliminated have been replaced by technology. In the
old days, floor workers typed more than 40 million keystrokes a day
processing orders. Now, more than 95 percent of all buying and selling is
done by computers. Brokers dash around toting e-brokers, a wireless handheld
device.
The NYSE's management touts the resulting hybrid as the best of both worlds
-- the speed of automation but the judgment and care that only a human being
can offer. Skeptics, including those at other exchanges, most now entirely
run by computers, say the Big Board is a relic.
Those still on the floor think the extreme volatility of the past few weeks
confirms both the value of the human component -- a computer, after all,
can't console or advise an uncertain investor -- and tests its limits.
"I'm half human and half machine, which is OK with me," Mogavero says. "As
long as both halves are working -- and it has been tested several times in
the last two weeks."
1:20 p.m., Dow up 42.69.
David Henderson has two trader's coats in his closet. When stocks are
tanking, he dons the red one. It's been very well worn recently. But for two
weeks now, Henderson's been telling others on the floor that the bottom may
be near. Other brokers rib him about this. But Henderson is steadfast. To
show he means it, the trader -- whose family has worked the floor for 150
years -- got his green jacket off the hanger.
"I told a few people if we don't get a good rally, I'm going to burn this
jacket," he says.
Now, with less than an hour before the Fed weighs in, Henderson at last sees
justification for his optimism.
Yesterday's gain was sweet. But even today, he spots glimmers of what could
be good news. The price of oil is up about $5 a barrel, good for energy
stocks that have been battered recently. General Motors, one of the 30 blue
chip stocks that make up the Dow, is up 41 cents -- about 6.5 percent -- on
reports that fuel investor hope of a merger with rival Chrysler. Investors
seem to be moving to stocks like McDonald's Corp., whose value meals draw
consumers even in a down economy.
Henderson isn't kidding himself. Stocks never rise in a straight line and
there's no instant gratification in this market. But, maybe, the massive
plunge in the market and equally massive moves by federal policymakers to
rescue the economy set the stage for better days.
On the digital board overhead, the latest headline flashes past: "Time to
Give Bernanke Some Credit."
"No joke, Sherlock," Henderson says.
Beneath the headline, the board shows the Dow gaining steam -- up nearly 100
points in 17 minutes.
2:14 p.m., Dow up 76.78.
Just a minute to go now before the Fed is expected to speak.
But traders have been whispering "shhhh" since noon. Now the whispers grow
louder and more frequent, a joking way to let off steam.
"Quiet on the set," one trader shouts.
But 2:15 ticks by. Then 2:16. Finally, two minutes past due, the headline
flashes past on the digital board: "Fed Funds Rate 50 BPS to 1 percent. Door
open to more cuts."
The only reaction from the floor is a murmur. Almost immediately, though,
investors begin parsing the Fed's statement for clues to the future. At
2:18, the Dow is down 18. A minute later, it's up 14.
Warren Meyers stands at trading post No. 5, his e-broker in hand, his eyes
still fixed on the screen. Another headline pops up, noting that investors
-- based on the Fed's assessment -- are betting there's a 100 percent chance
of another rate cut in December.
That might be good news for stocks, but offers a grim verdict on the
economy.
"What does that tell you?" Meyers says. "We're nowhere near the end of it."
2:52 p.m., Dow up 17.44
Can this market hold its ground? If it does, it will be the first time all
October the Dow has sustained two consecutive gains.
It's striking, though, that for all expertise clustered on the floor,
there's little agreement on just where things might go next.
"It would be a great day if we were plus 50 or down 50," Frankel says. He
turns to Anthony Riccio, a fellow broker, who's tracking incoming orders for
Bank of America, JPMorgan Chase and other banks stocks. Buyers outweigh
sellers, Riccio reports. The market seems to be building momentum.
By 3:16, the Dow is up 165.
Three minutes later, it's up 186.
Eventually it peaks up 290.
At 3:40, specialists post sheets on the sides of their computer monitors,
showing trade imbalances for the stocks they supervise. There are many more
orders to buy than to sell, and the sheets are posted to draw more sellers
into the market. That could make for a strong finish.
"This is what we've grown accustomed to," Frankel says of the market's wild
swings. "They're violent. They're fast, and you just can't believe the price
movements."
That's not always apparent to the average investor, who pays attention
mostly to how stocks finish days, and who may have lost track of how things
use to be. Now stocks are fluctuating more in a single day then they used in
a whole year.
But it's not just the size of the jumps. It's also the sudden snaps in
momentum. And no time is more dangerous than the market's final minutes.
3:31, Dow up 220.64.
As the session enters its final half hour, the market waffles.
"Oh, they're giving up some of the gains," shouts Steve Grasso, who trades
for Frankel. "Hold, hold!"
But the Dow catches itself. At 3:48, it is up 276.
"Pretty impressive," says a smiling Weisberg, the longtime trader. "We'll
take it."
Minutes later, though, the market seems to come off its tracks. Just why is
not easy to figure.
At about 3:45, one of the financial news channels relays a report about
General Electric Co., quoting its CEO as saying the company forecast a 10 to
15 percent drop in its revenues. Before the afternoon is out, a GE spokesman
will clarify that the comments were merely hypothetical.
But that will come too late for the market, where investors are rushing to
sell GE -- one of the mainstays of the Dow -- pushing it down sharply.
The selling seems to beget more selling. To Weisberg, the longtime trader,
it hints darkly at hedge funds and others gaming the market. He blames the
Securities and Exchange Commission for allowing shortsellers -- who bet that
stocks will fall -- to do so even when the stocks are already dropping.
The gains of the day are disappearing fast. But the Dow clings to a small
gain until, at 3:57, it loses its toehold.
"Ring the bell! Hurry up!" a trader shouts from the middle of the floor.
But Weisberg, disgusted, has seen enough. He grabs his baseball cap, wraps a
scarf around his neck and bids his co-workers good night.
A moment later, the board shows 4 p.m., and the bell sounds. Dow down 119.
The market has fought bravely. But it has lost today's battle.
4:30 p.m.
The damage isn't quite as bad as it first appeared. It takes a few minutes
for all the trades still in the system to settle out, curtailing damage to
the Dow to 74 points lower than where it began.
Just half an hour ago, this floor was mayhem. Now, nearly all the traders
are gone, leaving the custodians to sweep up the notes jotted on napkins,
the water bottles and paper cups.
"We had a great run for 98 percent of the day," Frankel says wistfully. His
voice is ragged and he's short on sleep. It's days like this, the
43-year-old trader jokes, that have turned his hair white. He heads for the
door.
Mogavero, too, is trying to look beyond the market's brutal last minutes and
keep things in perspective. There's a whole economy to think about. Even
when it's not going well out there, investors and companies still need to
transact business, she says.
It's been that way for 216 years, ever since that afternoon under the
Buttonwood Tree. What will tomorrow bring?
"We'll do it all over again," she says. "That's what we do."
