Markets remained closed for the second-straight day as
hurricane Sandy threatened to affect 60 million lives. While many
companies had to postpone their earnings releases, a few
including Ford and Archer Daniels Midland came out with their
results. Markets are now expected to reopen starting Wednesday,
though activities on the NYSE might be limited to electronic
trading. Meanwhile, Sandy, one of the biggest ever storms to hit
the U.S., has left millions of households without power.
While it was the first time in 27 years that markets were
closed due to weather troubles, NYSE's announcement of suspending
operations on Tuesday as well marked the first time since 1888
that the exchange was closed for two consecutive days owing to
the weather. Markets are now expected to open on Wednesday. Larry
Leibowitz, chief operating officer of NYSE Euronext (NYSE:
NYX
), said: "We have a green light". U.S. stock market operators
conducted a test; whereby they tested trading activities based on
the backup system of NYSE. Apart from NYSE, Nasdaq (NASDAQ:
NDAQ
), CME (NASDAQ:
CME
) and Chicago Board Options Exchange (NASDAQ:
CBOE
) will also resume operations.
Though markets remained closed, some corporate results were
released. Among them, Ford Motor Co. (NYSE:
F
) reported a 17.6% year-on-year surge in its third quarter
earnings. The company also outpaced the Street's estimates and
the results were helped by a strong showing by North American
operations. Also, Archer Daniels Midland Company (NYSE:
ADM
) beat estimates, though its quarterly earnings slipped almost
14% from the year-ago quarter.
Meanwhile, the S&P Dow Jones Indices released the
S&P/Case-Shiller Home Price Indices on Tuesday, which marked
a 0.9% increase in average home prices for both the 10- and
20-City Composites in August as against the previous month. While
19 of the 20 cities registered gains, only Seattle incurred a
0.1% drop. However, the consumer confidence report which was
scheduled to be released on Tuesday was postponed to November
1
Looking at the economic impact of Sandy, various forecasts
predict the storm will cause damages of up to $50 billion.
Earlier, Eqecat, a disaster modeling company, had projected that
the U.S. economy may incur losses between $10 billion and $20
billion. Separately, Kinetic Analysis Corp is projecting losses
will reach $25 billion; while its research and development
director said insured losses amount to $7 billion to $8 billion.
Forecasting firm IHS Global Insight estimates that property
damages may touch $20 billion and another $10 billion to $30
billion will be incurred as lost business. The storm has already
left about 8 million houses without power and thousand of flights
have been cancelled. Also, about 70% of East Coast oil refineries
were forced to remain closed. Moreover, New York has been
severely affected and this region substantially contributes to
the nation's economic output.
However, certain experts say the damages are a short term
phenomenon, as in the longer run, reconstruction activities will
contribute to the growth. IHS Global Insight projects a 0.6
percentage point negative effect on the nation's economic growth
for the quarter ending in December. Striking a positive note,
chief economist for Moody's Analytics, Mark Zandi, said: "The
bottom line is, it's very disruptive, very painful, but at the
end of the day these kinds of natural disasters typically don't
show up in national economic data". He also said the count for
unemployed people may be balanced by people working extra hours
in reconstruction activities.
Thus, the act of rebuilding will boost certain sectors. Forbes
has compiled a list of 10 stocks that may gain from the
situation. Construction companies stand the best chance to
benefit because of the reconstruction activities to be undertaken
following the storm. Construction companies including Fluor
Corporation (NYSE:
FLR
) and Granite Construction Incorporated (NYSE:
GVA
) have therefore made it to the Forbes list. Also, The Home
Depot, Inc. (NYSE:
HD
) and Lowe's Companies Inc. (NYSE:
LOW
), which can be instrumental in the 'repair work', feature on the
list. The need to pump out the flood might see the businesses of
Xylem Inc. and Pentair Ltd (NYSE:
PNR
) improve.
ARCHER DANIELS (ADM): Free Stock Analysis
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CBOE HOLDINGS (CBOE): Free Stock Analysis
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CME GROUP INC (CME): Free Stock Analysis
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FORD MOTOR CO (F): Free Stock Analysis Report
FLUOR CORP-NEW (FLR): Free Stock Analysis
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GRANITE CONSTRU (GVA): Free Stock Analysis
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HOME DEPOT (HD): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
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NYSE EURONEXT (NYX): Free Stock Analysis
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PENTAIR LTD (PNR): Free Stock Analysis Report
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