This Day in Dow History: Before the World Changed
This article is part of a recurring series on Wall Street's storied past. All events presented here took place on one or more of the years following the 1896 creation of the Dow Jones Industrial Index.
The Dow Jones Industrial Average (INDEX: ^DJI) opened at 9,603.36 on Sept. 10, 2001 and closed at 9,605.51, virtually unchanged. It would not trade again until Sept. 17.
The threat of recession -- which officially began in March but was not acknowledged until later -- pushed leaders of both political parties toward stimulus measures. Reports of unemployment surging from 4.5% in July to 4.9% in August prompted pressure on President Bush to drop his "cautious approach" to economic policy, according to New York Times reports. The White House responded to these calls with a request for patience, saying that "we need to let the President's tax cut, as well as the Federal Reserve's interest rate cuts, take full effect." However, leaders of both parties expressed a tentative willingness to use surplus Social Security funds to combat the effects of an economic slowdown.
Struggling Excite@Home, one of the largest Internet companies and search engines of the early dot-com era, sought buyers for its highly popular Blue Mountain Arts e-card service on this day in 2001. Blue Mountain, acquired in 1999 for $780 million, was sold to American Greetings (NYS: AM) three days later for less than 5% of its original price. Excite@Home entered Chapter 11 bankruptcy that October.
Forbes presented a major prophecy about the future of the dot-com era today in 2001. Summed up, its message was "Internet II will be what the Internet was supposed to be." Internet II, or dot-com 2.0, was to be flush with broadband access, run large-scale distributed computing systems, offer a complete entertainment portal for all forms of media, operate everywhere -- including car dashboards, cell phones, appliances, cash registers, and walls -- and create a $10 trillion industry, all by the end of 2004. The central points of this prediction were surprisingly spot-on, but its date wound up being a bit early. The year 2004 is notable in dot-com 2.0 terms primarily for two reasons: Google's (NAS: GOOG) IPO and Facebook's (NAS: FB) founding.
On Sept. 10, 2001, The Times offered nervous investors the reassurance of Merrill Lynch chief U. S. investment strategist Christine Callies, who felt that the past week's 3.5% loss was a "final capitulation" of stocks before an inevitable rebound. She went on to say, "I hope today means that people came back from vacation and are taking a more dispassionate view of ... the economic data, because I think the economy is turning."
The Dow would go on to lose 15% of its value over the following year. It bottomed out that October, having lost 24% from the close of trading on Sept. 10, 2001. The Dow again reached 9,605 -- the closing value that day -- eight years later, on Sept. 11, 2009.
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