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| English: An Allstate store in Moncton (Photo credit: Wikipedia) |
Exchanges across the U.S. closed Monday and could stay that way Tuesday as the potentially history-making storm stomps its way up the East Coast.
Futures traders made bets Monday that the stock market would open lower — about 48 points off on the Dow industrials — once trading resumes. From there, though, the market action could be volatile. “Investors have every reason to be on edge as they await the conclusion of natural, corporate, and political events,” said Sam Stovall, chief equity strategist at Standard & Poor’s. “Our belief is that November will be a month to remember.”
Interestingly, Stovall said stocks usually rise in the aftermath of major storms. Of the 13 worst hurricanes in U.S. history, only Ike in August 2008, which struck as the economy was entering freefall, and Hugo in 1989, saw stocks that were negative in the three-month and six-month intervals afterwards. The median six-month gains approached 6 percent. “History says that hurricanes typically don’t trigger market declines,” Stovall said. “Individually, the market’s performance following major hurricanes has been uneven, as equities are more likely driven by wider-reaching global events than localized natural disasters. Still, Hurricane Sandy is likely to leave a mark.
The most obvious area would be on property and casualty insurers, which will have to wrestle with maybe $5 billion or more of claims.
Analysts at Bernstein Research expect some familiar names such as Travelers, Allstate, and Chubb to take some early hits but ultimately rebound.
“As a longer-term investor, even with all the companies in our coverage likely to announce losses in coming days, we’re just not that concerned, for the storm seems less powerful than broad, and even dramatic headline economic losses typically end up being much more muted insurable events,” Bernstein’s Josh Stirling and Michael Kovac said in a research note.
Waves wash over the sea wall near high tide at Battery Park in New York, Oct. 29, 2012 as Hurricane Sandy approaches the East Coast (AP)
Following Hurricane Irene in August 2011, the insurer stocks traded down as much as 8 percent then recovered as damages became known and investors realized the companies could handle the losses. ... Continue to read.
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