September 11, 2001

After the terrorist attacks of 11 September 2001, US equity markets were closed for four trading days — the longest closure since the Great Depression. When the NYSE reopened on Monday 17 September, the S&P 500 fell roughly 5% in a single session and approximately 12% over the first full week. Airlines, insurance companies and hotels were hit hardest. The attacks compounded an already-deteriorating macro picture (the dot-com unwind and a manufacturing recession were both well underway), and the Fed cut rates aggressively in response. Equity markets recovered the immediate losses within roughly a month, though the broader bear market continued into late 2002.

• Defence and security-related industries (defence contractors, security technology) outperformed in the months that followed.
• US Treasuries rallied on the safe-haven bid and the Fed's response.
• Gold rose moderately in the weeks around the attacks.
• Staples and healthcare — the textbook defensives — held up better than cyclicals.

• Airlines — several US carriers (US Airways, United) ultimately filed for bankruptcy in the following years.
• Insurance and reinsurance, which faced the largest single insured loss in history at the time.
• Hotels, casinos, travel and tourism — discretionary consumer spending on travel collapsed.
• Concentrated exposure to financial centres and any business model dependent on continuous market access during the closure.

• Markets price in shocks rapidly once they reopen — much of the move was concentrated in the first few sessions and the immediate losses were recovered within a month.
• Geopolitical shocks tend to be most painful for industries with direct operational exposure (here: airlines and insurance), while the broad index recovers faster than the worst-hit sectors.
• The "shock" return matters less than the macro context it lands in. 9/11 hit during an active equity bear market, so the bounce was real but the longer-term downtrend resumed.