Wall Street Unfazed by Hurricane Irene

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Scott Eells / Bloomberg / Getty Images

Morning commuters exit the subway at the Wall Street station on Monday. New York City's transit system was almost fully operational after shutting down this weekend due to Hurricane Irene.

Sure, Hurricane Irene wasn’t the raging monster that forecasters and the media had warned about, but it still left billions of dollars in damage in its wake. Investors, however, have largely shrugged off the storm.

ABC News estimates that the total direct damage from Irene is between $7 and $13 billion, although regional economies (like Philadelphia and New York City) could suffer in the aftermath as businesses take time to get back on their feet. That could add billions more to the tally.

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That said, it’s Monday, and the financial markets are already reacting to Irene in a number of ways. From a bird’s-eye view, investors are shrugging off the storm. The Dow Jones Industrial Average was up more than 200 points around midday while gold was down $7.70 (to $1,814 per ounce).

That’s a revealing short-term yardstick. If traders really thought Irene would take out a big chunk of the U.S. economy — the ultimate “bad economy” hedge would be rising today, and it’s not.

So that’s the good news. If someone had told you on Saturday morning that the stock markets would be up and running in New York City on Monday, and that stocks were in plus territory, you might have advised a session or two with a good psychiatrist. But that’s what we’re seeing so far.

Still, Irene has left her calling card in other ways for stocks and they’re worth noting:

Insurers have the last laugh – With damages muted as Irene leaves town, insurers have already found financial high ground. Shares of key insurance company stocks like Allstate (up 6.8%), Hartford Financial (up 6.7%), and Travelers (up 4.6%) are on the rise, as investors quite correctly figure that claim payouts won’t be nearly as steep as analysts had thought going into the weekend. Even better for insurers, just the threat of another Irene situation in 2012 should cause insurers to raise premiums next year. Having dodged a bullet, consumers might feel it’s better to be safe than sorry, and absorb the rate hikes with little complaint.

Utility companies are glowing – While widespread power outages were reported along the eastern seaboard this weekend, the consensus seems to be that utility companies handled the storm effectively, and that’s being reflected in share prices this morning. Duke Energy, a big energy provider along the lower eastern U.S. coast, and New York-based Consolidate Edison, both saw shares rise in Monday trading.

Volume is expected to be light, but only for the short-term – Public transportation in New York City was suspended during the storm and still getting up and running early Monday morning. But many in the tri-state area won’t be trading Home Depot or Lowe’s this morning – they’ll be visiting the actual stores looking for generators, humidifiers, and power saws. “If anything, this will just result in lessened volume,” Randy Billhardt, head of institutional sales and trading at MLV & Co in New York, told Reuters Sunday. “We don’t want to put anyone in danger, so getting in will be based on each person’s level of comfort and their ability to get into the city. … Since this is usually a quiet week, I won’t push anyone to do anything out of their comfort zone.”

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One other stock-price silencer could come from the retail sector, where companies like Target and Urban Outfitters, which normally do a ton of “back-to-school” business on the East Coast in the last weekend of August, saw weak traffic instead. Both stocks were flat in early Monday trading.

All in all, Irene may have packed a wallop, but the sense is she held something back climbing up the coast this weekend. That’s a break, albeit a moderate one, for investors, who’ll surely have something else to worry about by this time next week. If not sooner.