Sandy vs Katrina - A Look At Post-Storm Market Performance

Posted by Bigtrends on November 2, 2012 6:43 AM

Sandy vs Katrina

A Look At Post-Storm Stock Market Performance

The impact of Hurricane Sandy on the mid-Atlantic region of the United States is no doubt unlike anything that part of the country has ever seen before, but there have been some comparisons made to Katrina and the impact that the storm had on New Orleans.   More than once, we have heard of Sandy being referred to as the tri-state area's Katrina.

With that in mind, the chart below shows the intraday trading of the S&P 500 Index (SPX) (SPY) in the week leading up to Katrina as well as the weeks after the storm made landfall on the Gulf Coast on 8/29/05 (blue line).  The prices of the S&P 500 for the 2005 period are on the left axis.  As shown, the S&P 500 declined by 1.2% in the week leading up to landfall (gray shaded area).  Post landfall, the S&P 500 quickly erased all of its pre-landfall losses and more.

For the sake of comparison, we also overlaid the S&P 500 over the five trading days preceding the landfall of Sandy (green line, prices right axis).  Similarly to the 2005 period, the S&P 500 was also lower over the five trading days leading up to Sandy's landfall with a decline of 1.5%.  How the direction of the S&P 500 pans out over the next several days/weeks is anyone's guess and will be determined by a host of other factors besides Hurricane Sandy, but if the market's performance post Katrina is any indication of how it will perform in the days and weeks ahead, investors will have at least one piece of good news.

SPX Katrina vs Sandy Performance Comparison

It's only been a few days, but so far the post-Sandy market has been closely tracking the post-Katrina market.

Courtesy of Bespoke