EmailHurricane Sandy hasn't officially hit land yet, but her impact is already being felt. High winds, huge waves, and heavy rain are hitting the eastern seaboard and things are only expected to get worse over the next 24 hours. Accordingly, regulators, exchange operators, and broker dealers have concurred that markets should be closed today. The same order will likely be given again for Tuesday, but that is still pending confirmation.
The NYSE and Nasdaq are closed. Electronic trading today was an option that was entertained for a while, yet that option was eventually shut down for safety and trading integrity issues.
The CBOE and NYMEX are closed. The CME will suspend trading of options and index futures at 9:15 a.m. ET while the Treasury market is slated to close early at 12:00 p.m. ET.
The futures trading that is taking place has a negative bias to it. S&P futures are down 9 points and are trading 0.6% below fair value.
Major averages in Europe are all lower with losses generally capped at 1.00%. Asian markets were mixed.
Earnings concerns persist and they aren't tied solely to Hurricane Sandy. They were already entrenched in the lackluster results and weak guidance that has been provided in recent weeks.
Currently, third quarter earnings are projected to decline 1.2% while revenues are forecast to decline 0.6%, according to Thomson Reuters.
The data from Thomson Reuters also indicates 41 S&P 500 companies have given guidance for the December quarter. Out of that total, 37 companies have issued negative guidance.
The negative-to-positive preannouncement ratio, therefore, is a whopping 9.3-to-1, which is the highest on record (since 1996).
Sandy won't help ease concerns about the earnings outlook. With estimates that as many as 60 mln people could be affected by Sandy's footprint, it is fair to say most industry groups are going to be impacted by shutdowns related to natural forces.
Assuming there isn't a protracted shutdown of a major population center, there will be pent-up demand on the other side of the storm that will help offset the lost business. In most cases, goods and services that might have normally been purchased at this time will likely be deferred until November.
On a related note, personal income and spending data for September was released this morning.
The report from the BEA showed income rising 0.4% (Briefing.com consensus +0.4%) and spending increasing 0.8% (Briefing.com consensus +0.6%). This information was embedded in Friday's Q3 GDP report, so the reaction to it has been understandably muted.
The reaction to Hurricane Sandy will take shape over the next 24 hours. Right now, the default (and common sense) approach is to batten down the hatches.
