With Hurricane Florence at the doorstep, experts estimate it to incur damages worth $170.2 billion along the East Coast, as well as the destruction of around 759,000 homes. Insurance companies are expecting the losses to mount up to $20 billion.
Meanwhile, crude oil rallied as the hurricane threatened fuel supply flow. Analysts believe the hurricane impact to be moderate and temporary on the energy sector, which includes hindering gasoline flow through a key pipeline.
Most companies along the East Coast are preparing for the hurricane by shuttering factories and operations. Gildan Activewear (GIL), Pfizer (PFE), agricultural giant Cargill, Daimler, Boeing (BA) and Volvo Car Group have closed down their operations in North Carolina, South Carolina, and Virginia.
As residents prepared for the storm, supplies were cleared on Tuesday at Walmart (WMT) store outside Raleigh, North Carolina.
Thousands of vehicles could be damaged from the high winds and flooding triggered by hurricane Florence, according to a Cox Automotive report. If the hurricane’s current path is maintained, then North Carolina could lose 20,000 to 40,000 vehicles. Prices for used vehicles could be impacted as dealers refresh inventories to meet demand.
The economic impact is likely to be small but could riddle data for months. In the previous year, it was hard to assess the impact of the hurricane on the quarterly GDP growth. Economists believe that the impact of hurricane Florence on the economy remained widespread and cannot be ascertained accurately.
In addition, tax cuts and trade war has made it difficult to assess the data on employment, consumer spending, and manufacturing. The hurricane’s impact could be first felt in the initial jobless claims that come on a weekly basis.
Hurricane Florence has turned worse due to a slight shift towards the south, threatening to bash the entire Carolinas coast.
According to the National Oceanic and Atmospheric Administration, Katrine in 2005 is considered the costliest storm to date that incurred $161 billion in losses. Harvey has been termed as the second-largest with an estimated $125 billion in costs.
Ahead of the hurricane, insurance and construction stocks are already taking a beating. Investors fear that large payouts could eat into the insurance company’s bottom-line. Shares of Travelers Companies (TRV), Allstate (ALL), Assurant (AIZ), and MetLife (MET) have traded in the red zone over the past three days.
Cement and building materials companies like Summit Materials (SUM), Martin Marietta Materials (MLM), and Vulcan Materials (VMC) remained in the red territory as new home construction is set to take a hit in the short-term. On the other hand, roofing stock including Quanex Building Product (NX), Beacon Roofing Supply (BECN), and Owens Corning (OC) have rallied for the past three days as the business is likely to increase after the storm is over.