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The historic snowstorm barreling toward the Northeastern United States will likely have big ramifications—both directly and indirectly—for investors’ portfolios.
Perhaps you remember the brutal winter of early 2014 that brought weeks upon weeks of freezing temperatures to much of the country. I hate the cold, so I try not to remember this period, but one aspect of that long cold snap does bear remembering: the Federal Reserve and other economic wizards used the frigid period as an excuse for a weak first quarter economy. If this week’s snowstorm pans out the way many expect—dumping feet of snow over much of the Northeast—could we be in for a repeat performance?
Well, if New York City gets between 24 and 36 inches of snow in a 24-hour period through late Tuesday, we could well see the NYSE close for weather-related reasons. Superstorm Sandy put a similar kibosh on trading amid a two-day shutdown in 2012, so there’s a recent precedent here. With earnings season heating up, such a closure could cause a major headache for companies like Apple (AAPL ), 3M (MMM ), AT&T (T ), and Pfizer (PFE ), all of which are due to deliver earnings reports on Tuesday. They’ll likely still report, but investors could be left waiting in the cold for Wall Street’s reaction to the results.
And then there’s the wider economic impact of such a large blizzard. People in affected areas certainly won’t be out shopping, so retailers could take a hit for a few days. If widespread power outages result from the storm, companies like ConEdison (ED ) might find themselves in the firing line again. If you recall, the Sandy debacle left tens of thousands of New Yorkers without power for several weeks and damaged ED’s reputation.
If the worst does happen, and this storm knocks out trading, commerce, and power for an extended period, I won’t be at all surprised to see the event used as an excuse for weak first quarter economic activity (if indeed the Q1 numbers do come in a bit light).
While adverse winter weather is nothing new, the markets and economy have proven particularly vulnerable to recent major weather events. Investors certainly shouldn’t panic about a storm approaching, but they should keep potential scenarios in mind, and prepare for the worst. As we’ve seen recently, weather can be quite disruptive to particular businesses, and to the economy as a whole.
And for goodness sake, if you are in the path of this storm, like we at Dividend.com are, make sure to be safe!