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Wall Street Shows Resilience Amid Hurricane Katrina Worries

Strategic Insights

— 1 min read

As Hurricane Katrina's devastation of the Gulf Coast continued to unfold, Wall Street investors were left uncertain about the storm's economic impact, leading to a mixed market session yesterday. Despite concerns about the potential for a sharp economic downturn, key indices showed modest gains for the week. The Dow Jones industrial average rose 0.48 percent, the S&P 500 added 1.07 percent, and the Nasdaq composite climbed 0.96 percent.

Key Takeaways:

  • Investors were cautious about the economic impact of Hurricane Katrina, with some experts warning of a potential economic downturn similar to the aftermath of the 9/11 attacks.
  • The decline in oil prices, which fell $1.90 to settle at $67.57 a barrel, provided some relief to the market, as the government and International Energy Agency tapped reserves to counter disruptions to 90 percent of oil production in the Gulf of Mexico.
  • The Labor Department reported that 169,000 jobs were created in August, but the job growth was overshadowed by the devastating situation in Hurricane Katrina's wake, leading many to fear a economic slowdown.
  • Jack Ablin, chief investment officer at Harris Private Bank, predicted that the Federal Reserve would eventually stop raising interest rates to prevent the economy from sliding further.
  • The largest union at Boeing went on strike, shutting down airplane production for the first time in 10 years, and airlines faced increasing pressure from high oil prices.
  • Northwest Airlines warned that it could lose as much as $400 million this quarter due to increased spending on jet fuel, putting it close to bankruptcy.
  • Albertsons, a large supermarket chain, jumped 11.2 percent after announcing that it was considering putting itself on the auction block.

Statistics:

  • The Dow Jones industrial average fell 12.26 points, or 0.1 percent, to close at 10,447.37.
  • The Standard & Poor's 500-stock index slipped 3.57 points, or 0.3 percent, to 1,218.02.
  • The Nasdaq composite index declined 6.83 points, or 0.3 percent, to 2,141.07.
  • The 10-year Treasury note declined 2/32, to a price of 101 23/32, with a yield of 4.04 percent.
  • Oil prices retreated with a barrel of light crude sinking $1.90 to settle at $67.57 on the New York Mercantile Exchange.

Sources:

  • Wall Street Journal
  • Bloomberg Financial Markets
  • The Associated Press

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