Insurance and construction stocks are getting hammered ahead of Hurricane Florence

Posted on: September 13, 2018, by :

hurricane florence

With Hurricane Florence barreling down on the Carolina coast, investors are scrambling to get ahead of the inevitable market fallout.

As soon as it became clear that the storm was bound to reach the US mainland, traders started fleeing their holdings in companies and industries seen as particularly exposed to the storm.

That’s certainly been true of insurance and construction-material stocks. Both are heavily exposed corners of the market that have absorbed deep losses over the past three trading days.

Here’s a breakdown of the pre-hurricane market damage:

Insurance

Investors are likely anticipating large payouts from the insurers to policyholders in areas affected by the hurricanes. A sudden glut of such payments can eat into an insurance company’s bottom line.

An index of insurers in the S&P 500 has slipped 1.3% over the past three days, with 19 of 23 companies declining during the period. Notable movers have included:

  • Travelers Cos. (-3.5%)
  • Allstate (-3%)
  • Assurant (-2.2%)
  • MetLife (-1.8%)

Cement and building materials

Traders are bracing for weakening sales from manfacturers of construction materials, specifically cement. If the hurricane causes widespread damage, new home construction will take a hit, at least in the short-term before the rebuilding commences. Notable movers over the past three days have included:

  • Summit Materials (-9.4%)
  • Martin Marietta Materials (-4.1%)
  • Vulcan Materials (-2.2%)

Roofing stocks have rallied, and oil could be next

But it hasn’t been all bad for stocks. Companies closely linked the business of roofing have climbed since news of the hurricane started gathering steam.

That includes Quanex Building Products (+14% over three days), Beacon Roofing Supply (+10%) and Owens Corning (+5.2%).

The wild card now will be oil, which should theoretically see its price increase as supply weakens. But while the resource spiked more than 2% on Tuesday, some experts have downplayed the effect of the hurricane, since no major oil refineries are in the path of the storm.

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