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Post-Attack Market Jitters Take Toll on Funds

The September 11 events made a bad quarter worse.

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Almost every aspect of American life was up-ended by the terrorist attacks on New York's World Trade Center and Washington's Pentagon on September 11, and mutual funds proved to be no exception. 

It hadn't been a great quarter before the attack occurred; most domestic stock-fund categories were already losing money before September 11, and after the attacks, things went from bad to much worse. Not only did the fund industry suffer personal losses, including manager David Alger, but when the market reopened after the attacks on September 17, a sharp sell-off ensued. The Dow dropped 14.2% in the next five sessions, the steepest weekly loss for that index since 1940, and the Nasdaq declined 16.1%--the second-largest weekly decline in that exchange's history.

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Catherine Hickey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.