Stock, bond trading shut a second day as Sandy batters New York

‘Potential Issues’

“Do you really want to open up the market and have these potential issues right before the election, right before month end?” Matt McCormick, who helps oversee $7.3 billion at Cincinnati-based Bahl & Gaynor Inc., said in a telephone interview. “I’d rather be slow and correct than fast and wrong and really wrong. It’s better to be conservative.”

The NYSE’s plan to switch floor trading to Arca spurred investor concern about potential malfunctions in a market still shaken by recent trading mishaps, including a software error at Knight Capital Group Inc. that almost sent the Jersey City-based market maker into bankruptcy in August. Nasdaq experienced delays in opening trading of Facebook Inc. in its initial public offering in May, causing losses for some traders who bought more shares than intended. Bats Global Markets Inc. canceled its IPO when it couldn’t get its shares to trade on its own exchange.

Investors said it would be important for exchanges to open on Oct. 31 in order for fund managers to buy or sell stocks to adjust holdings by month’s end.

‘Wednesday in Focus’

“Everybody is keeping Wednesday in focus as we come into month-end,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in a telephone interview. His firm oversees $250 billion in assets. “That will have implications for a variety of factors, which is why the exchanges are working behind the scenes to make sure trading regardless of the conditions is open in some form of fashion on Wednesday.”

Sifma recommended trading in dollar-denominated fixed- income securities end at noon. Futures on the Standard & Poor’s 500 Index closed down 0.4 percent at 1,402.4 after sliding as much as 0.8 percent during the session.

“Everybody wants to get the markets open,” NYSE Chief Operating Officer Larry Leibowitz said Oct. 28. “We all know how important this is and we take the decision seriously. People expect the markets will be resilient and able to operate. The tenet is that the markets should be open if at all possible.”

900 Miles

The storm, 900 miles across, shut the federal government and state administrations from Virginia to Massachusetts. It halted travel and upended the presidential campaign. It may cause as much as $20 billion in damage, according to Eqecat Inc., a risk-management company. As many as 10 million people may lose power, according to Seth Guikema, a Johns Hopkins University engineer.

Hurricanes haven’t hindered stock gains in the past, according to a study from Standard & Poor’s on the market performance following the 13 costliest storms. The S&P 500 gained an average 3.9 percent three months after the hurricanes and climbed 5.8 percent over the next six months, the study showed.

“History says that hurricanes typically don’t trigger market declines,” Sam Stovall, S&P’s New York-based chief equity strategist, wrote in a note. “Equities are more likely driven by wider-reaching global events than localized natural disasters.”

Bloomberg News

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