Understanding the totality of the damage from Hurricane Florence will take years. It will leave a multi-billion dollar path of destruction across communities. The devastation caused by the storm will never be forgotten by millions of families.
For Wall Street, though, it's old news.
It may strike some as heartless to mention the financial markets when millions have been impacted by the storm. Watching the market reaction to catastrophes is not callous or indifferent to the suffering of victims.
After all, Mother Nature and money are facts of life.
Consider this: the National Flood Insurance Program will be billions more in debt due to Florence. That is money borrowed from the U.S. Treasury, which has money because it borrows from investors willing to loan the federal government money backed by the guarantee of taxpayers.
Insurance stocks sold off well ahead of Florence's landfall. This is what the markets do _ anticipate changes in financial futures. Shares of property insurers Allstate, Travelers and Chubb fell 2 percent or more over the week before Florence hit the United States. These insurance carriers cover property across the country and credit analysis firm Moody's expects big carriers to "have the capacity to withstand this hurricane event." And, in fact, property insurance stocks recovered slightly the day Florence's winds first started coming ashore in the Carolinas.
As the Florence forecast took shape, traders bid up the stock prices of construction companies, a generator manufacturer and car rental firms. Avis and Hertz stock jumped as much as 10 percent days before the storm hit. It's speculation that cars will be ruined, driving up demand for rentals. Still, these stocks have produced double-digit losses for investors this year.
As the weather clears, the stock market will move on. But for those left in Florence's path, the financial reality will remain.
