Despite the howling winds and torrents of water—rain and flood—that Hurricane Irene hurled at the business district of New York City, business continued pretty much as usual on Monday morning, with some companies opening their offices and others advising employees to work from home until transportation was fully restored.
The equity exchanges—NYSE Euronext (NYX), Nasdaq OMX Group, Bats Global Markets and Direct Edge Holdings LLC—all opened for regular sessions, bond market schedules held to routine, and the New York Mercantile Exchange opened as well. The major indexes all closed higher, with the S&P 500 and the Dow rising more than 2% and the Nasdaq surging more than 3%.
While some institutions such as American Express said that their buildings would remain closed, largely due to a lack of employee transportation, the company said it would be open for business with its New York-based employees working remotely. Others, like Goldman Sachs, merely needed to remove the sandbags and open the doors.
The monstrous storm that barreled up the East Coast during the weekend left billions of dollars of damage in its wake, whether from downed trees and power lines, storm surge or flooding from torrential rains, but on Sunday afternoon most areas hit by the storm were beginning to clean up and evaluate the toll.
Before Irene hit, market activity provided little indication that a massive hurricane was about to shred the coast; even last week’s earthquake, according to Sam Stovall, chief investment strategist at S&P, failed to elicit the expected response—a drop in stocks. Instead, the market actually gained, indicating, according to Stovall, “a counter-trend rally.”
“During the final full week of August,” said Stovall in a statement, “S&P Global 1200 rose 3.3%, while the U.S. large-, mid- and small-cap indices advanced from 4.7% to 6.1%. What’s more, all sectors in these four benchmarks posted gains on the week.” This despite the shock of an earthquake in a region not prone to them and a hurricane expected to devastate the coast from top to bottom. Of course, Stovall reminded, most sectors were still in the red “since the April 29 recovery high for the S&P 500.” Even Ben Bernanke’s comments at Jackson Hole on Friday, although they indicated “an overall positive” in Fed policy, left the door open for action in September while leaving conditions as they are at present.
Lowered expectations and a reputation for volatility loom for September, and rebuilding in the wake of Irene does not indicate investment opportunities, cautioned Stovall. Citing previous natural disasters and the lack of a lasting effect on the economy, he pointed instead to a short-lived counter-trend rally and a need for caution and defensive investing in the months to come.