S&P 500; US Indexes Fundamental Daily Forecast – Hurricane Damage Will Affect All Stock Sectors

U.S. stocks are trading lower during the pre-market session. Although Fed Chair Janet Yellen’s speech on Friday was perceived as dovish, stocks failed to respond with a bullish move. Investors are closely monitoring the damage from Hurricane Harvey. Early guesses put the damage in the billions of dollars.

The storm is expected to deliver a blow to the local economy which should trickle into the national economy. How it effects the economy will be determined by how much damage Harvey does to the extensive cluster of refinery and petrochemical factories in the region.

The shipping industry could be affected. The risk of flooding along the Houston Ship Channel could negative effect heavy industry including oil tankers, oil refineries and petrochemical plants.

Hazardous materials could be released into the waterways which would have a huge impact on environment. This would lead to the shutdown of several refineries.

Employment would also be affected. The local unemployment rate would skyrocket, taking down local businesses.

Utilities are going to be affected including gas and electricity.

Planes can’t take-off or land in Houston so airline companies will take a financial hit. With the damage in the billions and still climbing, insurance companies will be at risk.

Given the situation in Texas, it’s hard for me to find a reason to be bullish stocks today. Almost all sectors of the S&P 500 Index will be affected by the hurricane so I expect investors will be taking protection against the start of a steep downturn especially since this is also Non-Farm Payrolls week.

Volume is expected to remain below average so price swings could be exaggerated. Investors have to be prepared for volatility and a possible two-sided trade.