On Wall Street, trading was cautious on Monday as the damage caused by Hurricane Harvey in Texas is being assessed, with stock prices in the financial and energy sectors falling, while those in technology rose.
The Dow Jones weakened by 0.02 percent, to 21,808 points, while the S&P 500 strengthened by 0.05 percent, to 2,444 points, and the Nasdaq index rose by 0.28 percent, to 6,283 points.
Caution prevailed in the market yesterday as the damage from Harvey, the strongest hurricane to hit southern Texas in the last 50 years, which brought heavy rains and significant flooding, is being evaluated.
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Harvey has evoked memories in the U.S. of the trauma from 2005 when Hurricane Katrina caused a humanitarian disaster with over 1,800 dead and devastated entire neighborhoods of New Orleans.
In the quarter during which Katrina wreaked havoc, the growth of the U.S. gross domestic product significantly slowed, but later accelerated due to the reconstruction of the devastated areas.
Now, the economic damage is substantial, but analysts say that the reconstruction of the area will mitigate the negative economic consequences.
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Yesterday, stock prices in the financial sector fell the most, averaging 0.5 percent, with shares of insurance companies under pressure as investors try to assess the impact of Harvey on that sector.
– The initial market reaction was sharp as investors followed human dramas and infrastructure destruction, but later the market calmed down. This is a major humanitarian disaster, and the worst may not be over yet. However, regarding the impact on the market, I do not know how significant the negative consequences will be, given that huge incentives for this region are expected, says Jim Paulsen, a strategist at Leuthold Group.
In addition to the financial sector, shares of oil giants Chevron and Exxon were also under pressure yesterday, falling about 0.3 percent, a result of declining oil prices.
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On the U.S. market, the price of a barrel plunged 2.5 percent, to $46.70, as investors fear that the shutdown of several refineries in Texas and the Gulf of Mexico will lead to a rise in crude oil inventories. On the other hand, gasoline prices have risen sharply.
Stock prices of companies that could benefit from the reconstruction have also increased. For example, Home Depot’s stock rose by 1.2 percent.
Stock prices in the healthcare and technology sectors have also risen.
The caution of investors is indicated by below-average trading volume. On U.S. exchanges, 5.13 billion shares changed hands yesterday, while the average daily volume over the last 20 days was around 6 billion.
Cautious trading was also observed on European exchanges yesterday. The Frankfurt DAX slipped by 0.37 percent, to 12,123 points, and the Paris CAC fell by 0.48 percent, to 5,079 points. The London Stock Exchange was closed yesterday due to a holiday.
