History favors market rebound October 8, 2001: 7:27 a.m. ET U.S. stock markets post some sharp drops after attacks, but rebound with time. NEW YORK (Reuters) - Wall Street always pounds stocks in the immediate aftermath of military action, but things start looking up as investor panic fades after a few months. A check of six events in U.S. history since 1898 shows that the Dow Jones industrial average, the oldest U.S. market benchmark, falls in the days immediately after momentous events like the bombing of Pearl Harbor, but typically rebounds within six months. Wall Street posted its worst week since the Depression after markets reopened in the wake of the Sept. 11 attacks that leveled the World Trade Center and killed more than 5,000 people. The Dow fell 14.3 percent in the week ended Sept. 21. Since then, the blue chip market gauge recovered some ground, as panic selling receded, various U.S. stimulus packages partly restored investor confidence and Wall Street pinned its hopes on an economic rebound next year. The Dow has risen 10.73 percent since its closing low Sept. 21, but still is off 5.06 percent since the attacks. Stocks tend to get hammered first after war-related events, but later rally, a study by research firm MarketHistory.com shows. The events MarketHistory.com researched included: the sinking of the U.S. battleship Maine Feb. 15, 1898; the sinking of the passenger ship the Lusitania May 7, 1915; the attack on the Pearl Harbor naval base Dec. 7, 1941; the invasion of Kuwait by Iraq Aug. 2, 1990; the bombing of the World Trade Center in New York Feb. 26, 1993; and the bombing of federal offices in Oklahoma April 19, 1995. A day after the event, the Dow Jones industrial average was down an average of 1.9 percent, MarketHistory.com said. One week later, the Dow average dropped by 3 percent. But then the average typically began to turn around. Two weeks after an attack or bombing, the index was down an average 2.1 percent, and within a month it was down just 1.6 percent. After six months, the Dow industrials were up an average 11.3 percent, and a year from the watershed event the benchmark gained 18.4 percent. "In the near term, events like this cause near-term fear, panic, and economic disruption but that is when market bottoms are formed," Tim Ghriskey, head of Ghriskey Capital Partners, a money management firm for wealthy individuals, told Reuters Sept. 12. "And usually a year later we have stronger and much higher financial markets as economic stability and investors return." At the two-year mark, the Dow industrials were up an average 30.7 percent; at three years up by 50.4 percent; and after five years up by 82.2 percent.