Hurricane Sandy is expected to cost between $10 billion and
$20 billion in damages -- a far cry from the $110 billion toll
from Hurricane Katrina of 2005, economists say.
As a whole, it may have little impact on the country's $16
trillion gross domestic product. But it will likely hurt some
sectors more than others and could even create a boom for
Here's a look at five sectors and their ETFs that could feel
the impact most.
The seven-state region in Sandy's path is home to nearly 284,000
total residential properties at risk of damage, according to
CoreLogic. They're valued at almost $88 billion. The U.S. housing
sector had already been rebounding from the housing bubble and
hurricane damage could boost rebuilding.
IShares Dow Jones U.S. Home Construction Index (
) has to rise another 117% just to recover its 2007 peak.
Carriers have canceled nearly 9,000 flights because of Hurricane
Sandy, according to FlightAware.com, an airlines and flight
tracking firm. Other estimates put the number at 12,600 as of
Monday afternoon. Hurricane Irene caused more than 10,000 flight
Storm-related cancellation on the East Coast could cause
business travel losses of up to 514,000 trips and $606 million in
spending, according to the Global Business Travel Association. It
estimates up to $58 million a day in travel spending losses for
the 11 East Coast states affected.
Guggenheim Airline (
) already lagged the market this year, returning 13.8% vs. 14.3%
for the SPDR S&P 500 (
Hurricane Sandy will cost the insurance industry $5 billion to
$10 billion, or one to two times the impact of Hurricane Irene in
late August 2011, according to James Shanahan, an equity research
analyst at EdwardJones in St. Louis, Mo.
Despite the losses, the hurricane will have a positive impact
because insurers will be able to raise premiums.AllState Corp. (
), which he covers, had already raised rates 7% to 9% annually
the past four years, Shanahan said. Sandy shouldn't be a major
shock to insurers as catastrophic losses are already accounted or
modeled in quarterly estimates.
The major insurance ETFs areKBW Insurance ETF (
),iShares Dow Jones U.S. Insurance Index (IAK) andPowerShares
Dynamic Insurance Portfolio (PIC).
Gas and oil refiners:
Pump prices are likely to rise as oil refineries shut down.
Northeast oil refineries process a little less than 1 million
barrels of oil per day, down from 1.6 million barrels a day in
2007. But the drop may be dampened by lower consumer
Major ETFs to watch areUnited States Gasoline (UGA) andiShares
Dow Jones U.S. Oil & Gas Exploration & Production
Consumers and retailers:
The jury is out on this one. A drop in demand for clothes and
vacations may be offset by increases in need for disaster
preparedness and property replacement.
"While hurricanes and other natural disasters are extremely
negative for wealth, they are usually positive for growth," said
Jason Schenker, president of Prestige Economics in Austin, Texas,
"whether it is the last-minute run to hardware stores and
supermarkets, or after-the-storm replacement of furniture,
windows, cars, and other damaged durable and nondurable
The consumer was already stretched and unlikely to spend more,
said Brian Frank, manager of the Frank Value and president of
Frank Capital Partners with $25 million in assets under
management. Folks in the U.S. are only putting 3.3% of their
income into savings, as of September, so they don't have much
left over for discretionary spending.
ETFs to watch:SPDR S&P Retail (XRT) andConsumer
Discretionary SPDR (XLY).