All U.S. exchanges will remain closed Tuesday
U.S. stock trading was canceled for a second day, joining bond markets, as 85-mile-per-hour winds and surging seas from Hurricane Sandy bore down on New York and paralyzed American capital markets.
The shutdown was announced by NYSE Euronext in a statement. Earlier, the Securities Industry and Financial Markets Association recommended a full market close tomorrow in dollar- denominated fixed-income securities after they shut at noon New York time today.
Risks posed by Sandy, expected to come ashore late today in southern New Jersey and potentially affect 60 million people, froze travel and spurred evacuations. Thousands of securities industry employees stayed home as the Atlantic's largest-ever tropical storms threatened to flood lower Manhattan, home to much of the borough's electrical infrastructure.
“It's an inconvenience, but clearly the safety of the employees and participants in the market is a primary concern,” James Angel, a professor at Georgetown University's McDonough School of Business in Washington, said in a phone interview. “Even if the exchanges can operate totally remotely, people connecting to the exchanges may be battling floods. We ran into the same issue after 9/11 even though Nasdaq and other trading venues could operate. ”
Trading in U.S. equity-index futures ended at 9:15 a.m. New York time today, CME Group Inc. said in a statement. SIFMA recommended trading in dollar-denominated fixed-income securities end at noon. Futures on the Standard & Poor's 500 Index closed down 0.4 percent at 1,402.4 after sliding as much as 0.8 percent during the session.
Exchanges from the NYSE and Nasdaq Stock Market to those run by Direct Edge Holdings LLC in Jersey City, New Jersey, and Bats Global Markets Inc. in Lenexa, Kansas, suspended operations. U.S. equity trading is spread across 13 exchanges and dozens of private venues run by brokerages.
The last time the NYSE cut trading hours for weather was Jan. 8, 1996, when a blizzard dropped more than 20 inches on New York City. It last closed for a full day for weather when Hurricane Gloria hit on Sept. 27, 1985. Markets have not closed for four days in a row since the start of 2007 when, following a weekend and the New Year's Day holiday on a Monday, they shut on Jan. 2 to observe a day of mourning for President Gerald Ford's death the previous week.
“Everybody wants to get the markets open,” the NYSE's Leibowitz said yesterday. “We all know how important this is and we take the decision seriously. People expect the markets will be resilient and able to operate. The tenet is that the markets should be open if at all possible.”
The hurricane is predicted to make landfall late today in southern New Jersey, then turn inland, according to an advisory from the National Hurricane Center in Miami. Winds may cause a tidal surge as high as a record 11 feet (3 meters), according to New York City Mayor Michael Bloomberg.
The storm, 900 miles across, shut the federal government and state administrations from Virginia to Massachusetts. It halted travel and upended the presidential campaign. It may cause more than $6 billion in damage and knock out power to 10 million for a week or more.
Sandy packed maximum sustained winds of 85 miles (140 kilometers) per hour, up from 75 mph earlier, the National Hurricane Center said at 8 a.m. New York time. The storm's eye was about 310 miles south-southeast of New York, moving at 20 mph. It is not expected to weaken before landfall at Cape May, new Jersey, the center said. It may bring a surge as high as 10 feet (3 meters) in Manhattan.
--With assistance from Brian K. Sullivan in Boston, Dan Hart in Washington, Christine Harper, Donal Griffin, Peter Eichenbaum, Jeff Sutherland, Whitney Kisling and Esme E. Deprez in New York and Andrew Rummer in London. Editors: Chris Nagi, Michael P. Regan
To contact the reporters on this story: Nina Mehta in New York at nmehta24bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoftbloomberg.net