How Hurricane Sandy is affecting markets—NYSE back up and running

October 31, 2012
October 31, 2012

Wednesday, Oct. 31

Update (9:31 AM EDT): The stock market opened quietly, although traders on the floor say they expect a heavy, volatile day of trading.

Update (8:40 AM EDT): Major US stock index futures are higher ahead of the resumption of trading, pointing to a positive open for US equities. But there’s little consensus about the likely volume and volatility of trading, and some lingering concerns about the exchanges’ ability to withstand any unexpected glitches or activity. 

Update (8:30 AM EDT): The New York Stock Exchange (NYSE) has had roughly 30 members of an emergency response team sleeping in its headquarters in the runup to trading being resumed today. The NYSE, which handles about one-quarter of US stock market trading volume, has said it expects to resume normal operations. The Nasdaq market and other US trading platforms are expected to be open for trading as well.

Tuesday, Oct. 30

Update (1:13 PM EDT): NYSE Euronext–the company which operates the New York Stock Exchange (NYSE)–tweeted that it will reopen the NYSE building tomorrow for normal trading:

While the exchange had said it would resume trading on Wednesday, flooding in the Financial District–the southernmost point of New York City–had some worried that only the exchange’s electronic arm (NYSE Arca) would reopen Wednesday. Investors were uneasy with the electronic trading arm conducting all NYSE trading, particularly after market-maker Knight Capital Group suffered more than $440 million in losses due to a trading glitch in August.

Update (12:58 PM EDT): Employees of Wall Street investment banks Goldman Sachs, Morgan Stanley, and Barclays are working from home today. Morgan Stanley will reportedly be up and running tomorrow, along with the stock exchanges, but many other bankers are still waiting for word on whether they’ll be back in the office on Wednesday.

Update (10:49 AM EDT): Investors are antsy to reopen markets on Wednesday–the last day of the month– because mutual funds, hedge funds, and other investors often use the day to present their financial results. Further, continued closure of the financial markets would be unprecedented; as it stands, this is already the longest weather-related closure since the blizzard of 1888.

That said, the physical headquarters of the New York Stock Exchange (NYSE) is located in a New York neighborhood that witnessed significant flooding during the storm, and some roads and public transportation remain closed in the wake of the storm. Officials have said that, if the trading floor cannot open, all trades will be conducted on NYSE Arca, the exchange’s electronic trading platform. Officials drew up a similar plan for markets to remain open electronically Monday, but eventually scrapped those ideas. Many were concerned that electronic platforms are more vulnerable to wild swings, like the one that happened after a trading glitch lost Knight Capital Group $440 million in August.

Update (10:21 AM EDT): European markets have rallied today after positive corporate earnings news, with seemingly little attention to the storm that has shut down markets in the US.

Update (01:09 AM EDT) US equity and dollar-denominated bond trading will be suspended again Tuesday Oct. 30, with plans to resume on Oct. 31. The exchanges are under some pressure to reopen Wednesday, as that’s the last day of the month. Some funds and investors use pricing on the final day of the month to communicate the value of their holdings. On top of that, a longer extended trading suspension could increase volatility when trading resumes.

Update (12:57 AM EDT) There was no dramatic impact from the storm on Asian trading, as shares there mostly ended morning trade slightly higher on expectations the Bank of Japan would announce further monetary easing policies later today. Liquidity was thin and trades remained small and cautious due to the lack of buying triggers from the US.

Monday, Oct. 29

Update (4:25 PM EDT): The CME Group says that it will reopen markets as of 5 PM EDT today for overnight trading. While equities markets will remain closed tomorrow, interest rate and futures trading will be back on.

Update (1:51 PM EDT): NYSE Euronext has formally announced plans to close Tuesday. Exchanges NASDAQ and BATS have followed suit. Bond markets will also be closed. Most exchanges say they plan to reopen Wednesday if possible.

Update (12:30 PM EDT): A number of economic releases have also been delayed in light of the storm. WSJ reports that the monthly report of nonfarm payrolls, an important indicator of jobs in the economy, could be delayed from its scheduled release on Friday. The Conference Board has also decided to push the latest publication of the Consumer Confidence Index back from Tuesday to Thursday at 10 AM EDT.

Original: Hurricane Sandy bears down on the east coast of the United States, with landfall expected later this evening local time. The storm is shuttering more and more US-based financial markets today, and now it seems likely that many markets will remain closed on Tuesday.

While it’s yet to be made official, Duncan Niederauer, the CEO of NYSE Euronext–the parent company of the New York Stock Exchange–isn’t optimistic about chances that the exchange will reopen tomorrow. Niederauer called such a possibility “hard to imagine.”

The CME Group announced that it would close its “interest rate complex,” which includes Treasury, Eurodollar, and Fed Funds futures at noon eastern time today after recommendations from the Securities Industry and Futures Markets Association (SIFMA). SIFMA has also recommended that bond markets close at noon today, according to Bloomberg.

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