New York: US stock and bond markets will be closed on Tuesday, as Hurricane Sandy forced Wall Street to shut down trading for at least a second straight day.
NYSE Euronext and Nasdq OMX Group said they made their decision in consultation with industry executives and regulators, and intend to reopen Wednesday, conditions permitting.
BATS Global Markets, the No. 3 US stock exchange, also said it will be closed on Tuesday. BATS said it was monitoring the situation before providing an update on its Wednesday plans.
“It doesn’t make sense to put people in harm’s way or to only have half a market,” said Nicholas Colas, chief market strategist at ConvergEx Group in New York. “If just the electronic market was open, that wouldn’t provide enough interest, with everything else still closed.”
Bond markets, which closed at noon EDT on Monday, will not reopen on Tuesday, a trade group said.
The hurricane could cost NYSE Euronext, CME Group Inc and Nasdaq OMX Group nearly $6 million in trading revenue each full day that stocks and bond markets are closed, Sandler O’Neill analyst Richard Repetto said.
The US stock exchanges’ closure on Monday for Hurricane Sandy came on the anniversary—29 October—of the 1929 stock market crash.
Equities trading executives on Monday had pressed the stock exchanges to clearly communicate their plans to avoid a repeat of Sunday night. Market participants and regulators decided late on Sunday to shut the stock and options markets for the first time due to weather in 27 years, reversing an earlier plan to keep electronic trading going on Monday, leaving some people complaining about the confusion it caused.
The biggest problem with the New York Stock Exchange’s initial plan to trade exclusively over its ARCA electronic system was that the contingency plan that it had created in March had not been vetted by many brokerage firms, the sources said.
The decision on whether to keep markets closed on Tuesday comes as Hurricane Sandy began battering the US East Coast on Monday with fierce winds and driving rain. The monster storm shut down transportation, shuttered businesses and sent thousands scrambling for higher ground hours before the worst was due to strike.
In New York, the mass transit system was shut down on Sunday evening, and many Wall Street employees were working from home, although major financial services firms were open for business at least with skeletal staff. Flooding is already hitting parts of Lower Manhattan and parts of New Jersey even before the storm makes landfall.
Transportation ground to a halt along the US Northeast coast on Monday, stranding local rail commuters, cruise passengers and air travelers from as far away as Europe and Asia, as Hurricane Sandy prompted closure of air, ship, rail and even highway service.
The transport woes also hit cargo operations, adding another dimension to the storm’s economic toll.
New Jersey’s Garden State Parkway, which has been ranked among the busiest US toll roads, was closed Monday in both directions along its southern 63 miles because of flooding.
Massive cargo container operations in New York and New Jersey shut down very early Monday, and will stay closed indefinitely, the port authority said, stranding millions of dollars worth of goods arriving for the holiday season.
Airlines canceled more than 11,500 flights for Sunday, Monday and Tuesday, including more than 6,800 so far Monday alone, Flight-tracking service FlightAware said.
The tracking service said it expected that figure to grow as the storm hits later Monday. Philadelphia’s airport was the hardest hit, with 1,220 cancellations on Monday. The service said the three New York area airports had each canceled about 1,000 flights for Monday.
New York and Washington, D.C., area airports remained open even though flights have been cancelled.
Like herding cats
The decision to close the stock and options market came on Sunday night after SIFMA, the Wall Street trade group, held a conference call around 11pm to debate whether to close, said a brokerage executive, who requested anonymity because he is not allowed to speak to the media.
“It was like trying to corral cats,” the executive said.
Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey, said the bigger financial institutions were willing to have staffing to stay open.
“The closer it got to midnight, the less sense it made to do it, because people were willing to do less and less,” he said. “Then we got a message that our building in Jersey City, the front doors are going to be sandbagged, so that effectively ended that.”
NYSE spokesman Richard Adamonis declined comment on friction with the brokerage community over the on-again, off-again decision to open trading during the storm.
Oil supply hit
The supply of petrol, diesel and jet fuel into the U.S. East Coast ground almost to a halt on Monday as Hurricane Sandy forced the closure of two-thirds of the region’s refineries, its biggest pipeline, and most major ports.
Benchmark New York harbor petrol futures jumped as much as 11 cents a gallon, with traders fearing that power outages and flooding could leave refiners struggling to restore operations after the broadest storm ever to hit the US.
With Sandy gaining strength as it nears the coast, refinery, pipeline, port and terminal operators shuttered or reduced operations, increasing the risk that bottlenecks would keep supplies of motor and heating fuel from customers.
Nearly 70% of the region’s refining capacity was on track to be idled.
President urges resolve
President Barack Obama on Monday urged East Coast residents in the path of Hurricane Sandy to heed evacuation orders and assured them the government was ready to respond swiftly, but he warned them it would take a long time to clean up in the storm’s aftermath.
Republican presidential candidate Mitt Romney canceled most of his campaign events to show respect for the hurricane’s potential victims.
Both men are acting cautiously to avoid coming across as focused on politics while millions of people face the effects of fierce winds and driving rain.
Scrapping campaign plans to return to Washington, Obama sought to show voters just eight days before the 6 November election that he was giving top priority to his presidential duties in a looming national crisis, rather than his bid for re-election in a tight race.
He also appeared determined to demonstrate that his administration had learned the lessons of White House predecessor George W. Bush’s botched handling of Hurricane Katrina in 2005, which inflicted serious political damage.
Rushing back from a campaign visit to Florida, Obama huddled with top aides in the White House Situation Room for an update on Hurricane Sandy, which started to batter the densely populated East Coast as one of the biggest storms to ever hit the US mainland.
It was forecast to move ashore Monday night in New Jersey as what Obama called a “big and powerful storm” whose slow-moving course would affect millions of people.
“I’m confident that we’re ready, but I think the public needs to prepare for the fact that this is going to take a long time for us to clean up,” he said. “The good news is we will clean up and we will get through this.”
Obama has tried to draw a sharp contrast with the Bush administration, which was heavily criticized for its slow and inept handling of Katrina as the hurricane devastated New Orleans early in his second term.
Obama faces political danger if the federal government’s response goes awry in the final days of the election campaign, but he also has a chance to look presidential compared with his Republican challenger, Mitt Romney.
Obama had blunt words for those in Sandy’s path.
“When they tell you to evacuate, you need to evacuate. Do not delay. Don’t pause,” he said. “Don’t question the instructions that are being given, because this is a serious storm and it could potentially have fatal consequences.” REUTERS
Janet McGurty in New York, Matt Spetalnick and Jeff Mason in Washington contributed to this story.