How Will Osama Bin Laden’s Death Affect Markets?

Date: Monday, May 2, 2011
Author: Eric McWhinnie, Wall Street Cheat Sheet

Late Sunday night, televisions and websites around the world declared that President Obama would be making an important statement shortly.  The President’s statement turned out to be that America’s most wanted terrorist, Osama Bin Laden, has been killed.

This is huge positive news, as it has been nearly 10 years since the 9/11 attacks.  Back in 2003, President George W. Bush made a similar Sunday night announcement that Saddam Hussein was captured.  Let’s take a look at what a positive war announcement can do for markets.

President Bush made the announcement on December 14th, 2003.  The Dow (NYSE:DIA) closed the following Monday at 10,022. The Dow then followed a month long rally and closed at 10,453 on December 31st, which represents a 431 point rally.  The S&P 500 (NYSE:SPY) also rallied during the same time period.  The S&P rallied from 1,068 to 1,111, which represents a 43 point rally.

In late trading, oil (NYSE:USO), gold (NYSE:GLD), and silver (NYSE:SLV) are all trading lower as a result of the breaking news.  It will be interesting to see if the US dollar (NYSE:UUP) can sustain a rally from its recent 3 year lows.

Going forward, investors will not only have to weigh this news on the macro level, but also on the micro level.  Individual defense stocks such as Raytheon (NYSE:RTN) and Boeing Company (NYSE:BA) should be watched closely.