Hurricane Harvey, marked as a Category 4 storm, swept the Texas coast late Friday with 130 mph wind and rain roughing up inland and coastal communities alike. This is one of the deadliest hurricanes to have hit the region, claiming over 30 lives so far. The storm inundated the Houston area with residents grappling with tough conditions.
Harvey soon weakened into a tropical storm, with effects reaching Louisiana and the coastline from Morgan City, LA to Port Bolivar, Texas. But it seems the hurricane is not likely to have a similar devastating effect on the U.S. stock market, as claimed by two of Wall Street’s top strategists. Although this is one of the largest disasters to strike the country, the stock market is expected to bounce back as it has always done after a natural disaster.
John Stoltzfus of Oppenheimer Asset Management emphasized that damages caused by hurricanes in the past were discounted and digested by the stock markets and the country’s economy much quickly. U.S. stock markets have been resilient when grappling with hurricanes and other natural disasters, and it is expected to be the same even in the current crisis situation. Citigroup’s Tobias Levkovich also pointed out that natural disasters do not have a very serious implication on the country’s economy.
What happened in the US stock market?
Insurance companies show a sharp dip in their shares, with Travelers Companies pulling the average of Dow Jones lower. The stock marked the day as the worst day of the year. On the other hand, refinery stocks saw a rise in bids as a result of increasing gasoline prices. The rise in gasoline prices is because of refinery shutdowns in the Houston area. Futures of RBOB gasoline for the month of September surged as much as 6.8 percent on Monday.
But Monday’s trade was flat for the larger stock market, with S&P 500 flipping between profits and losses for a major part of the session. Tobias Levkovich also added that Hurricane Katrina and Sandy had a much deeper effect on the country’s economy, while Harvey lacked a “storm surge” and kept damage generation at the minimal level.
Hurricane Katrina and Sandy left destruction wakes costing about $160 billion and $75 billion respectively. Hurricane Harvey hopefully wouldn’t roil the US stock market like the previous two hurricanes, despite the shattering consequences of such weather.