The NYSE also halts electronic dealings after deciding it could create instability
POSTED: 01:30 a.m. HST, Oct 30, 2012
NEW YORK » Remember when President Grover Cleveland ran for a second term or when Jack the Ripper spread terror in London or when you first read that Kaiser Wilhelm II had become German emperor?
Yes, it's been that long.
On Monday, shortly after midday, the New York Stock Exchange announced it would close stock trading for a second day today due to a once-in-a-century storm. Once in a 124-year storm is more apt. The last time trading was halted for two consecutive days due to weather was in 1888.
This time, instead of snow drifts 40 feet high, surging water threatens to crest between 6 and 11 feet. And instead of the Blizzard of 1888, it is the more benign sounding, but equally disruptive, Hurricane Sandy.
"It's a monumental event and we take it very seriously," said Larry Liebowitz, chief operating officer of NYSE Euronext, the company that operates the New York Stock Exchange. "It's not a hyped-up drama."
Leibowitz spoke after a series of conference calls with stock brokerage firms, regulators and officials during which a "consensus" emerged to close markets for a second day. As for Wednesday, he said he was "hopeful" the exchange would open.
Nasdaq, another major stock exchange, said it was optimistic, too.
As the storm approached Manhattan midday Monday, water cascaded over seawalls near the iconic NYSE trading floor, and a highway running along the island's East Side was flooded in parts.
Areas around New York's Financial District were part of a mandatory evacuation zone.
Inside the exchange, the lights were ablaze early Monday, but, aside from security workers, few humans were present. There were no specialists on the floor matching buyers and sellers of stocks, and there were no traders.
There were more signs of life at the Duane Reade a block or so away. One man was buying candles, scented, and asking for extra matches, as another walked out clutching a 12-pack of beer.
The uncertainty the storm generated came at the start of a big week in the United States. This is the last full week before the Nov. 6 presidential election and culminates Friday with the release of monthly jobs data, which many analysts think could affect the vote. Labor Department officials are still hopeful that the report can be released on time, but they acknowledge that the storm could cause a delay.
"A significant swing in either direction is likely to be heavily reported in the media, potentially swinging the undecided voter," said James Hughes, chief market analyst at Alpari, of the jobs figures.
Originally, the NYSE had planned to close just its exchange floor and allow traders to buy and sell stock electronically. Then it decided to shut down electronic trading, too. The NYSE said it was worried about putting staff who were needed to help run the electronic trading in danger.
NYSE's Leibowitz said he was also worried about low trading volumes due to many investors taking the day off. The fear is that just a few trades could whip stock around like the storm outside, sending prices surging one minute or plunging the next. As automatic trading by computers has come to dominate stock trading, it was a fear voiced by other Wall Street experts.
"If you switch on the computers, they'll be trading like it's a normal day. They don't need to deal with New Jersey Transit being out," said Julian Bridgen, managing partner of Macro Intelligence 2 Partners, an investment consultancy, from his wind-whipped home in Hoboken, N.J. "You could have a potent cocktail."
In commodity trading, the CME Group's New York trading floor was closed, but electronic markets were functioning. Crude oil fell 80 cents to $85.48 in electronic trading. CME said Monday that electronic trading for commodities would also be open today.
Bond trading will also be closed today. The Securities Industry and Financial Markets Association called for an early close to bond trading Monday, at noon. The yield on the benchmark 10-year Treasury note was 1.72 percent, compared with 1.75 percent late Friday.
European stock markets fell Monday. France's CAC-40 fell 0.8 percent, Britain's FTSE fell 0.2 percent and Germany's DAX lost 0.4 percent. Insurers such as Munich Re, Aviva PLC and Zurich Insurance fared worse than other stocks as investors worried about the potential cost of the storm's damage.
"The economic impact cannot be underestimated," said Elsa Lignos, an analyst at RBC Capital Markets.
Some companies are postponing quarterly earnings reports scheduled for release early this week. So far, that includes Pfizer Inc. and Thomson Reuters.
Even with many markets shut down, there was some encouraging news about the U.S. economy Monday. The Commerce Department reported that consumer spending increased 0.8 percent in September. That followed a 0.5 percent gain in August and was the best showing since February.
Personal income rose 0.4 percent, an improvement from a slight 0.1 percent gain in August and the best gain since March. It's a closely watched indicator as consumer spending drives about 70 percent of the nation's economic activity.
The last time the major exchanges closed for a day due to weather was on Sept. 27, 1985, when Hurricane Gloria struck. That storm largely spared New York, however. The skies were sunny by 4 p.m., when the trading day normally ends.
Since 1885 there have been 372 emergency and celebratory closings of the NYSE, some for minutes, others for days, according to the NYSE.
Stock trading halted for two hours in May 20, 1910, for the funeral of Britain's King Edward VII. In February 1969 the exchange closed for a day because of snow. In early 1978 heavy snow forced Wall Street to suspend operations again.
Trading also has been interrupted during political crisis. Trading was halted on Nov. 22, 1963, when President John F. Kennedy was assassinated. On March 30, 1981, markets closed about 45 minutes early after word that President Ronald Reagan had been shot.