Hurricane Sandy‘s winds and rains subsided today, and the New York Stock Exchange announced it will open for normal operations on Wednesday. This was the first time since 1888 that weather shut down stock trading for two days.
NYSE Euronext said trading will resume for all U.S. equities, bonds, options and derivatives markets on — perhaps fittingly — Halloween.
Investors have been grappling with a volatile earning season as it is, and now are dealing with uncertainty as they wait for reliable estimates of the damage caused by the storm.
“Our building and systems were not damaged and our people have been working diligently to ensure that we have a smooth opening tomorrow,” said Duncan Niederauer, the CEO of NYSE Euronext, in a statement. “Our thoughts and prayers remain with the families and communities suffering in the wake of this terrible natural disaster.”
On Monday evening, news reports — quickly denied by a spokesperson — said the floor of the exchange was flooded with three feet of water.
Will Sandy have lasting effects?
“It’s one more uncertainty, and loss of life and damage are always tragic, but to an extent, it’s not a big event that will throw us into recession. It’s more disruptive than anything,” said Scott Brown, chief economist with the investment firm Raymond James.
The last time the exchange was closed for two days for weather was March 12 and 13, 1888, due to the famed blizzard of 1888, according to the NYSE website. The New York Stock Exchange was formed when two dozen stock brokers signed the Buttonwood Agreement in 1792.
Hurricane Gloria, on Sept. 27, 1985 was the cause of the last weather-related closing.
The longest the exchange has recently closed was Sept. 11 to 14, 2001, following the attacks on the World Trade Center.
The attacks of Sept. 11 were a graver concern to investors than a stoppage in the financial markets due to weather, Brown said.
“On 9/11, there were a lot more implications,” he said. “The view at the time was there will be huge security cost with the war and lower productivity.”
The NYSE says the exchange also closed at the outbreak of World War I, from July 31 to Nov. 27, 1914.
Brown, whose office in St. Petersburg, Fla. was far from the damage caused by Hurricane Sandy, said many investors are feeling anxious about the opening, though “there may be a bit of optimism if the markets are back in business.”
He said he is not concerned about a long term economic effect on the U.S.
“It pales in significance to the fiscal cliff,” he said.
Brown said most financial firms will recover from weather damage but lost electricity and transportation are also concerns for businesses.
“How will people get to work? Are subways going to be operating?” Brown said.
Though many transactions can be conducted online, that’s not much help if brokers’ homes are without power. Stock watchers said they did not expect a great surge of trading volume in the morning to make up for the lost days.
“Activity may be a bit subdued if people can’t get to work and get around, but for the most part this is postponing activity that will occur later on,” Brown said regarding trading volume.
When asked what financial professionals have been doing for the last two days, Brown said, “Other than sheer boredom, for us it was an opportunity in research to take a step back and look at the broader themes rather than focus on the day to day.”