Does Al Qaeda Time US Market? from Kim Zussman
Checking dates of the eight major (suspected or proved) Al Qaeda terror attacks against either US or US allies, I was curious about the possibility they time attacks to coincide with the falling US stock market.
Here are the dates, along with S&P 500 emini futures total point change for 20 days. PR20 is point total 20 days counting back from three days prior to terror attack — i.e., (t-3)-(t-23). The theory is that it takes a few days to execute the attack after down market has occurred. PPR20 is the 20-day sum of the period before the one just prior to the attack (as control for current market climate):
N Mean StDev SE Mean
pr 20 8 -21.50 49.31 17.43
ppr 20 8 29.12 27.43 9.70
Difference 8 -50.62 38.07 13.46
95% CI for mean difference: (-82.4537, -18.7963)
T-Test of mean difference = 0 (vs not = 0): T-Value = -3.76 P-Value = 0.007
Date pr 20 ppr 20
06/29/07 -40.75 34.00 Glasgow airport/London car bomb
08/10/06 5.25 15.50 London Heathrow plot
07/07/05 -3.50 23.50 London Underground bombing
03/11/04 5.00 9.50 Madrid train bombing
05/12/03 51.25 79.00 Riyadh Compound bombing
12/21/01 -9.50 60.50 Richard Reid bomb plot
09/11/01 -82.00 0.25 WTC attacks
10/12/00 -97.75 10.75 USS Cole bombing
I used paired t-test to see if the difference between pr20 and ppr20 was not zero, and it's not:
Paired T for pr 20 - ppr 20
N Mean StDev SE Mean
pr 20 8 -21.50 49.31 17.43
ppr 20 8 29.12 27.43 9.70
Difference 8 -50.62 38.07 13.46
95% CI for mean difference: (-82.4537, -18.7963)
T-Test of mean difference = 0 (vs not = 0): T-Value = -3.76 P-Value = 0.007
Only 3/8 pr20 periods were markedly down, so it's hard to say they target declines. But the significant pre-attack decline from prior might suggest the market sees them coming.