The streets of Boston's financial district, usually bustling, were empty on Friday as a virtual lockdown for a police manhunt disrupted the largest center for U.S. mutual funds and affected trading across markets.
Much of the city's financial community worked from home on Friday after authorities restricted travel in the city as they conducted a house-by-house search for a suspect in the Boston Marathon bombings. Police had shot and killed another suspect overnight.
Fund companies, banks and dealers used their emergency contingency plans, many of which were put in place after the September 11, 2011 attacks.
Fidelity Investments, which manages $1.7 trillion of U.S. investment assets and is the second biggest mutual fund company, told employees to work from home.
Loomis Sayles, which manages $191 billion, had about 50 percent of its staff in the office. Many of the firm's traders and portfolio managers had showed up early before authorities had widened their travel restrictions, said Dan Fuss, vice chairman and senior portfolio manager.
The change in routine weighed on trading volumes across markets, which were already relatively slow because of the lack of economic data. About 20 percent of the nearly $15 trillion of U.S. mutual funds and exchange-traded funds are managed out of Boston, according to Lipper.
"A lot of folks in Boston are out of the market, and anyone not in Boston is stuck watching the TV trying to find out what's going on there," said Brad Bechtel, managing director at Faros Trading, a foreign exchange brokerage based in Stamford, Connecticut.
In the stock options market, volumes were about half of what would be expected, given the number of earnings reports this week and the fact that options are expiring on Friday, said Ryan Detrick, technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
"It's not just the market participants in Boston, but the whole market is not in the mood to trade this morning. I was supposed to appear on TV today but that was canceled because the focus is all on Boston," Detrick said.
A WELL-TIMED TEST
Friday was a test of the emergency plans of many firms, but at least one had recently tried out its plan. Asset manager MFS Investment Management, whose Boston headquarters on Huntington Avenue near the Prudential Center houses more than 1,000 employees, had performed its semiannual test of its work-from-home plan on Monday, the day of the bombings.
"It worked fine," said company spokesman John Reilly, who added that MFS had asked most employees to work from home on Friday. Traders were encouraged to work at MFS's business recovery facility in a suburb about 25 miles outside of the city because it is harder for many of them to do their jobs from home, Reilly added. The company manages about $348 billion.
Many found the silence on the streets disquieting.
Larry Peruzzi, who runs Cabrera Capital Markets' international trading desk from downtown Boston, walked into his office at 7:45 a.m. Friday morning and told his two-person early morning crew to immediately leave and prepare to work from home, while he and his day-shift colleagues settled in for a long day at the office that he anticipated could extend overnight. Cabrera is a broker-dealer for institutional clients.
Peruzzi's normal half-hour commute by train from suburban Abington, Massachusetts, turned into an hour-long ride by car.
"The highway was just packed, and crawling," he said in a phone interview. "It was just eerie. There is low cloud cover so you can't see the tops of the building and electronic message boards are flashing directions and amber alerts. I'm looking out the window and a military helicopter is flying by."
Other professionals worked from home, too, including employees at the Boston offices of Citigroup Inc and JPMorgan Chase as well as lawyers who work in the Boston offices of Dechert LLP, McDermott Will & Emery and Goodwin Procter LLP.
Travel from Boston was trickier still.
Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts, had planned to take a train to New York, but service on Amtrak's Acela train out of Boston was suspended. He decided to take a flight from Logan airport outside of Boston.
"On the main approach to Logan, every taxi was being searched completely. There were about 20 taxis lined up with passengers told to get out while the state police went through every trunk, searched every piece of luggage."
(Reporting by Svea Herbst in Boston, and Jennifer Ablan, Daniel Bases, Jed Horowitz, Angela Moon, David Randall, Lauren Young and Steven C. Johnson in New York; Writing by Dan Wilchins; Editing by Paritosh Bansal and Kenneth Barry)