U.S. stock trading was canceled for a second day, joining bond markets, as 90-mile-per-hour winds and surging seas from Hurricane Sandy bore down on New York and paralyzed American capital markets.
The shutdown, the first for consecutive days due to weather since 1888, was announced by NYSE Euronext after consultations with other exchanges. The Securities Industry and Financial Markets Association earlier recommended a full market close tomorrow in dollar-denominated fixed-income securities after they shut at noon New York time today.
Risks posed by Sandy, expected to come ashore late today in southern New Jersey and potentially affect 60 million people, froze travel and spurred evacuations. Thousands of securities industry employees stayed home as the Atlantic’s largest-ever tropical storms threatened to flood lower Manhattan, home to much of the borough’s electrical infrastructure.
“It’s an inconvenience, but clearly the safety of the employees and participants in the market is a primary concern,” James Angel, a professor at Georgetown University’s McDonough School of Business in Washington, said in a phone interview. “Even if the exchanges can operate totally remotely, people connecting to the exchanges may be battling floods. We ran into the same issue after 9/11 even though Nasdaq and other trading venues could operate. ”
Exchanges are planning to reopen Oct. 31, weather permitting, according to statements from NYSE Euronext and Nasdaq OMX Group Inc. 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.
Exchanges from the NYSE and Nasdaq Stock Market to those run by Direct Edge Holdings LLC in Jersey City, New Jersey, and Bats Global Markets Inc. in Lenexa, Kansas, suspended operations. U.S. equity trading is spread across 13 exchanges and dozens of private venues run by brokerages.
Trading in U.S. equity-index futures ended at 9:15 a.m. New York time today, CME Group Inc. said in a statement. SIFMA recommended trading in dollar-denominated fixed-income securities end at noon. Futures on the Standard & Poor’s 500 Index closed down 0.4 percent at 1,402.4 after sliding as much as 0.8 percent during the session.
“Everybody wants to get the markets open,” NYSE Chief Operating Officer Larry Leibowitz said yesterday. “We all know how important this is and we take the decision seriously. People expect the markets will be resilient and able to operate. The tenet is that the markets should be open if at all possible.”
The hurricane is predicted to make landfall later today in southern New Jersey, then turn inland, according to an advisory from the National Hurricane Center in Miami. Winds may cause a tidal surge as high as a record 11 feet (3 meters), according to New York City Mayor Michael Bloomberg.
The storm, 900 miles across, shut the federal government and state administrations from Virginia to Massachusetts. It halted travel and upended the presidential campaign. It may cause more than $6 billion in damage and knock out power to 10 million for a week or more.
Sandy packed maximum sustained winds of 90 miles (145 kilometers) per hour, up from 75 mph earlier, the National Hurricane Center said. The storm’s eye was about 260 miles south-southeast of New York. It is not expected to weaken before landfall at Cape May, new Jersey, the center said.