After The Storm Is Business As Usual

Published by Filipe R. Costa on Wed, 31/10/2012 - 09:48
storm umbrella

Daily Market Commentary for October 31: It seems the hurricane Sandy is now far away from the stock exchanges and no longer a harmful storm. Behind it the wreckage has still to be removed and the billions of dollars in damage continue to rise. The damage was huge but equities won’t really be affected.

Although such a destruction scenario left by the passage of a hurricane gives the idea stocks will sink, that’s not true in most cases. Historical data shows that the stock markets have not been affected by hurricanes, at least as a whole. Of course there are sectors that will benefit and others that will have rough times. While the closed stores and insurance claims will certainly not be good for retailers and insurers, many homebuilders will be happy to get some extra business. But as a whole, the effects in the market will be more or less neutral and one shouldn’t expect much from it. For now the best is to concentrate in the economic data and earnings announcements.

This morning equities are on the upside and Wall Street is expected to open higher. Investors will prepare for the next jobs report to be released next Friday. This report can be crucial in giving direction to equities as investors are anxious for an opportunity to pick equities after the latest decline but still unsure due to lowly earnings reports. The Dow currently trades at 13,176 as pointed by rolling indices after hitting 13,000 yesterday. It seems to me an unjustified violent increase that will certainly result in ups and downs.