Hurricane Florence’s Effect On Stocks
Hurricane Florence’s wind speed has fallen to 110 miles per hour which is a modest help for the southeast as it braces for the major hurricane. The other change in the situation is the expected landfall has shifted south, meaning the principle impacts will be in Wilmington, North Carolina and Myrtle Beach, South Carolina. There will be severe flooding from rain and storm surge because this is a slow moving storm.
You can trade the storm by looking at individual names. You’ll want to buy Lowe’s and Home Depot if you think the storm will be worse than expected. You should buy the insurers if you think it will cause less damage than expected. Shorting Lowe’s and Home Depot might not be a good bet because the retailers have already sold extra materials for preparations, so they still saw an increase in sales because of the storm. Secondly, they have been doing well anyway. Since Monday, Lowe’s stock is up 4.33% and Home Depot stock is up 2.79%. They are up 24.8% and 12.74% year to date. Shorting them would need to be a quick trade and probably won’t bring many profits. Travelers stock is down 4.28% in the past 4 trading days. AIG stock is down 2.93%. They can be buys if the storm continues to weaken and the damage is less than expected.
Major Indexes Mixed On Wednesday
The stock market initially popped on the news that America would be trying to diffuse the trade skirmish with China, but it gave back those gains. The Dow and S&P 500 were only up 0.11% and 0.04%. The Nasdaq fell 0.23% and the Russell 2000 fell 0.16%. The social media stocks were hammered again as Facebook fell 2.37% to its lowest price since April. Twitter stock fell 3.69% and Snap fell 6.98% because it was downgraded to a price target of $5 by BTIG. Consumer staples and telecom were the biggest winners as they increased 1.25% and 1.42%. This shows it was a ‘risk off’ day. Tech and the financials were the biggest losers as they fell 0.5% and 0.89%. Micron led the tech stocks lower as it fell 4.27%. It is down 20.89% since August 30th.
