Sandy’s impact on business
Major U.S. stock exchanges expect to reopen today after Sandy, the worst storm to hit New York in nearly 75 years, closed trading for two days.
NYSE Euronext said the New York Stock Exchange would open, although it would switch to fully electronic trading if necessary. Nasdaq OMX’s Nasdaq stock market will also be operating today, as will BATS Exchanges.
“We are shooting hard to open tomorrow and fully expect to do so, but lots of firms are going to have either connectivity problems, or other things, so we are urging all firms to get out there and test their backup,” the chief operating officer of NYSE Euronext, Larry Leibowitz, said.
At least 30 people were killed and millions have been left without power after Sandy slammed into the East Coast on Monday. The storm shut down most businesses in Manhattan and caused a rare flooding of the subway tunnels, which is expected to keep the system closed for several days.
U.S. exchanges originally had planned to open markets on Monday, but they eventually responded to pressure from firms worried about employee safety, as well as the inability to see markets effectively function at light staffing. It was the first time in 27 years that exchanges closed because of bad weather.
Banks, brokers and others conferred for hours Tuesday about the feasibility of resuming trade. The storm was expected to result in tens of millions of dollars a day in lost revenue for exchanges and banks, analysts said.
After two days of closure that occurred during the busy corporate earnings season and at the end of the fiscal year for certain funds, trading is likely to be volatile.
“At least in the early trade I expect an over reaction regardless of the direction. I expect to see a lot of volume at least in the first hour,” said Art Hogan, managing director of Lazard Capital Markets in New York.
The NYSE, which accounts for about a quarter of U.S. stock market trading volume, is testing the possibility of routing trades through its electronic platform, Leibowitz said. Under normal conditions it handles about half its volume through its trading floor at 11 Wall Street, where traders and specialists buy and sell stocks in person.
“(Today) will not be without hiccups, but will be good enough that the market will be fine,” he said.
September 2001 was the last extended period of time that exchanges closed. The New York Stock Exchange and the Nasdaq closed on Sept. 11, a Tuesday, after the World Trade Center attacks and did not reopen until six days later, on Sept. 17.
“It would be unprecedented to have three days of closure from a weather-related emer- gency, and the greater point is that American markets do not want to be perceived as anything other than reliable,” said Mike Shea at Direct Access Partners LLC in New York. “That’s really the issue. An emergency like Sept. 11 was different.”