As Hurricane Sandy, also known as Frankenstorm, bears down on the East Coast, financial markets are being shuttered, business is coming to a halt and potential economic damages are already being assessed in preparation for what is billed as “the storm of the century.”
Both the New York Stock Exchange and Nasdaq were closed Monday, and will likely be closed Tuesday, although exchange officials on Monday were in conference calls to determine how to proceed. However, trading in all securities listed on the Big Board was moved to Arca, the electronic trading platform operated by NYSE-Euronext.
“Do not underestimate this storm,” said Gov. Andrew Cuomo of New York at a press conference on Monday morning. He noted that the superstorm fueled in part by Hurricane Sandy, even before reaching landfall, has already surpassed the overall damage wreaked by Hurricane Irene last year.
‘Don’t Be Stupid’: NJ Gov. Christie
“Don’t be stupid, get out, and go to higher, safer ground,” Gov. Chris Christie of New Jersey said in a news conference.
Analysts continue to assess the potential costs of the storm before a six- to 11-foot storm surge hits New York at high tide on Monday night. Frankenstorm could affect as many as 60 million people and cause damage in the range of $15 billion to $18 billion, according to a Bloomberg report. Hurricane Irene did $7 billion of damage last year.
The exchange closures were announced due to fears for staff safety despite resistance from banks and broker-dealers, which had requested that electronic trading remain open. Mayor Michael Bloomberg of New York announced Sunday the closure of the subway and bus system, making most finance workers’ commute all but impossible for an indefinite period.
Monday is the first time the NYSE has closed since Sept. 11, 2001. Both Goldman Sachs and Citigroup have closed their lower Manhattan offices, including their giant trading floors, to all but essential staff members.
As for the bond markets, the Securities Industry and Financial Markets Association recommends a full market close on Tuesday for the trading of U.S. dollar-denominated fixed-income securities in the United States “due to Hurricane Sandy and severe weather,” SIFMA announced Monday.
At the same time, SIFMA said that primary dealers would need to decide whether to provide limited staffing on funding desks on Tuesday in order to accommodate any potential open-market operations by the Federal Reserve Bank of New York.
Business Grinds to Halt
In addition, more than 5,000 flights have been canceled along with Amtrak train service in the Northeast corridor, effectively stranding people who had traveled to the East Coast on business ahead of the storm.
For example, Pristine Advisers on Sunday announced the cancellation of its annual closed-end fund conference at the Hilton Hotel in Midtown Manhattan, which was to be held on Tuesday for members of the brokerage community, financial advisors, fund analysts, strategists and high-net-worth and institutional investors. “I appreciate everyone’s great attempts in trying to make it in for our conference. At this time the governor of New York has declared it a state of emergency and as such, we unfortunately need to cancel the event,” wrote Patricia Baronowski-Schneider, president of Pristine Advisers, in an email. “We have been getting tons of emails from people whose flights and trains have all been canceled and I am now told that the city is shutting down after 5 p.m. tonight—no one will be able to get in or out. For those that have already made it in to New York, we sincerely apologize. This situation is completely out of our control.”
Baronowski-Schneider said the event would be rescheduled.
Frankenstorm’s impact also has extended to the presidential election. Both President Barack Obama and Republican contender Mitt Romney shuttered campaign events, with Obama canceling a Monday night engagement in Florida with former President Bill Clinton and Romney cancelling visits to Virginia and New Hampshire.
The National Oceanic and Atmospheric Administration’s environmental protection chief, Louis Uccellini, called the projected storm surge “the worst-case scenario” for New York City, Long Island and northern New Jersey, according to The Associated Press.
“It threatened to swamp parts of lower Manhattan, flood subway tunnels and knock out the underground network of power, phone and high-speed Internet lines that are the lifeblood of America’s financial capital,” the AP reported.