U.S. Stock Futures Drop as Hurricane Stikes East Coast
U.S. stock-index futures pointed to a lower opening for the Standard & Poor’s 500 Index for a second day as Hurricane Sandy, the Atlantic Ocean’s biggest-ever tropical storm, slammed into the East Coast.
Trading of futures resumed after a halt at 9:15 a.m. yesterday New York time. The U.S. securities industry canceled equity trading on all markets yesterday, moving to protect workers, as the 900-mile wide storm caused flooding from the beaches of Maryland to the narrow streets of New York’s Financial District.
Futures on the S&P 500 expiring in December retreated 0.6 percent from Friday’s close to 1,399.70 at 1:42 a.m. New York time. Dow Jones Industrial Average futures dropped 78 points, or 0.6 percent, to 12,976. Trading of equity-index futures and options will be halted again at 9:15 a.m.
Equity futures maintained losses earlier yesterday after a Commerce Department report showed consumer spending in the U.S. rose 0.8 percent in September, more than forecast, after a 0.5 percent gain the prior month. The median estimate in a Bloomberg survey of 71 economists called for a 0.6 percent increase. Incomes advanced 0.4 percent, the most since March.
The jobless rate probably rose in October as U.S. employers kept a tight rein on payrolls with the nation closing in on the so-called fiscal cliff, economists said before a report on Nov. 2. The fiscal cliff refers to more than $600 billion in tax increases and spending cuts that will take effect in 2013 unless Congress can reach a budget compromise.
The S&P 500 (SPX) has slumped 2 percent in October as companies from DuPont Co. to Microsoft Corp. reported earnings results that disappointed investors. Third-quarter earnings at 72 percent of the gauge’s companies that have reported so far beat estimates, according to data compiled by Bloomberg. Sales missed forecasts at 59 percent of companies, the data showed.
The equities trading shutdown, announced by the Securities and Exchange Commission, will extend through to today, joining bond markets. Exchanges are planning to reopen tomorrow, weather permitting, according to statements from NYSE Euronext (NYX) and Nasdaq OMX Group Inc. (NDAQ) Reports that the trading floor of the New York Stock Exchange was submerged were erroneous, Richard Adamonis, vice-president of communications at NYSE Euronext said by telephone.
The last comparable closure of the New York Stock Exchange was on March 12 and 13, 1888, when a blizzard dumped 21 inches of snow on New York, according to the company’s website. The exchange was closed for about 1 1/2 days after a snowstorm in February 1978.
Markets have not closed for four days in a row since the start of 2007 when, following a weekend and the New Year’s Day holiday on a Monday, they shut on Jan. 2 to observe a day of mourning for President Gerald Ford’s death the previous week.
Sandy, which is now a post-tropical cyclone packing maximum sustained winds of 85 miles (140 kilometers) per hour, made landfall in southern New Jersey about 8 p.m. New York time. The storm threatened economic damage of more than $20 billion, said Charles Watson, research and development director at Kinetic Analysis Corp., a hazard-research company in Silver Spring, Maryland.
New York Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP, issued evacuation orders for 375,000 people and opened 76 shelters. More than 670,000 customers were without power in the region as of 11:30 p.m. local time, according to Consolidated Edison Inc.
More than 10 companies postponed their earnings announcements due to the storm, according to data compiled by Bloomberg. Pfizer Inc. (PFE), the world’s biggest drugmaker that was originally scheduled to announce results today, said it will report on Nov. 1.
Office Depot Inc. (ODP), the second-largest U.S. office-supplies chain, moved its reporting date to Nov. 6, while McGraw-Hill Cos. and Thomson Reuters Corp. said separately that they will announce results on Nov. 2.
Hurricanes haven’t hindered stock gains, according to a study from S&P on the market performance following the 13 costliest storms. The S&P 500 advanced an average 3.9 percent three months later and 5.8 percent over the next six months, the study showed.
“History says that hurricanes typically don’t trigger market declines, Sam Stovall, S&P’s New York-based chief equity strategist, wrote in a note yesterday. ‘‘Equities are more likely driven by wider-reaching global events than localized natural disasters.”
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