Insurance Sector Weighs on Wall Street as Hurricane Irma Approaches Florida
U.S. stocks traded mixed on Thursday, as the insurance sector slumped in anticipation of Hurricane Irma making landfall.
Insurers Fall Hard on Storm Concerns
The S&P 500’s financial index declined 1.7% on Thursday, with insurance providers shouldering the heaviest loss. Insurers shed 1.9% in anticipation of a potentially devastating Hurricane Irma making landfall in Florida over the weekend.
The state of Florida is considered one of the country’s largest flood-prone markets. Although Florida’s private flood insurance market represents only a tiny fraction of all flood insurance in the state, Irma could have a massive impact. Policyholders, industry and government will be keeping a close eye on how private insurance performs in the wake of the storm.
As badly as financials performed, telecom suffered a bigger setback on Thursday. The sector fell 2.1%. Discretionary stocks were also down 0.9% as a sector.
The large-cap S&P 500 Index pared losses to close flat at 2,465.10. It was down by as much as 0.3% earlier. The Dow Jones Industrial Average slipped 0.1% to finish at 21,784.78.
Hurricane Tracker Predicts Irma Making Landfall Sunday
Meteorologists say there’s a 90% likelihood that Irma will crash into southeastern Florida by Sunday. Miami is considered to be in the worst possible position, based on the latest satellite images. There’s also a strong probability that the category 5 hurricane will make its way inland and possibly impact Georgia as well.
Irma has left at least eight people dead on the islands of St. Martin and St. Barts.
Hurricane Irma is one of the strongest Atlantic storm ever recorded. Its arrival on the heels of Hurricane Harvey, which ravaged the state of Texas last month, doesn’t bode well for the U.S. economy.
Jobless Claims Rise to Two-Year High
Harvey contributed to the biggest surge in U.S. jobless claims in nearly five years. The number of Americans filing for first-time unemployment benefits spiked by 62,000 to a seasonally adjusted 298,000 in the week ended Sept. 2, the Labor Department said. Analysts in a median estimate called for an increase to 245,000.
As expected, hurricane-ravaged Texas experienced the bulk of the increase as relief efforts were underway. State officials estimate that the economic impact of Harvey likely exceeded $120 billion. However, state Governor Greg Abbott says the damage could be as high as $180 billion.
By comparison, Hurricane Katrina cost $108 billion, with insurance covering $80 billion of the losses.