May 22, 2013
US markets shut on Tuesday, focus shifts to Wednesday
Hurricane Sandy will close US stock markets for a second day on Tuesday, as Wall Street turned its attention to whether markets would be able to resume functioning on the month's final trading day on Wednesday.
US stock markets closed on Monday due to weather for the first time in 27 years. Bond markets closed early, at noon, as winds and waves from Hurricane Sandy lashed the Eastern seaboard.
NYSE Euronext and Nasdaq OMX Group, the largest two US exchange operators, said they intend to reopen Wednesday, conditions permitting. The bond markets will also close on Tuesday, with traders aiming to reopen on Wednesday.
Wednesday is a key trading day because it marks the end of the month, when traders price portfolios. With New York still to feel the full impact of the storm Monday evening, fears remained that wind damage and possible power outages could test the ability of markets to reopen. New York's mass transit system, which most employees use to get to work, also remained shut and it was unclear when service would be restored.
Fierce winds and flooding were felt along hundreds of miles of Atlantic coastline and heavy snows were forecast farther inland at higher elevations as the center of the storm moved ashore along the coast of southern New Jersey or Delaware on Monday evening.
The broad effects of the market shutdown were beginning to become more apparent by late Monday, as analysts estimated banks and trading firms could lose tens of millions of dollars in revenue.
Some companies postponed their quarterly earnings reports, and banks closed branches in the Northeast, while promising to waive certain fees in hurricane-threatened areas.
Disaster modeling company Eqecat said the storm is likely to cause insured losses of $5 billion to $10 billion, and economic losses of $10 billion to $20 billion.
The trading closure also threatened to delay IPOs of at least six companies, while Facebook Inc employees were prevented from selling shares in the social media company after a "lock-up" on trading expired.
"If you go two days, you really start to create some serious financial stress for some players that need to get something done," said Jim Paulsen, of Wells Capital.
As Hurricane Sandy began battering the U.S. East Coast on Monday, many Wall Street employees stayed home. Major Wall Street banks had planned to open with skeleton staffing, but with the stock and options markets closed and the bond market closing at noon, many people said they had little to do.
"There's nothing to do, so I'm just relaxing," said one New York-based equities trader at a large global investment bank, who spent most of the day in his pajamas, staying in touch with his boss and clients via phone and email.
Steve Gerbel, who runs hedge fund Chicago Capital Management, said that when he called a Goldman Sachs Group Inc trading desk on Monday, he got to talk to employees from its Salt Lake City office for the first time.
Since markets were closed, Gerbel said he would spend most of the day dealing with paperwork that he typically put on the back burner, and his employees would do the same, or clock out early.
"I predict my office will never be cleaner than it will be today," he said.
The weather also canceled financial conferences, leaving companies that had flown executives into New York over the weekend scrambling to find ways to keep them busy. One firm offered media interviews with portfolio managers stranded in the city after a conference they were attending was canceled.
For operations and back-office staffers, it was a busy day, as workers struggled to keep data centers and company systems up and running.