Insurance stocks tumble as Sandy weighs on markets
Waterlogged from Superstorm Sandy and unmoved by a solid October jobs report, U.S. stocks fell sharply Friday. The Dow Jones industrial average dropped 139 points as details about the storm's costs began to trickle out.
Verizon Communications, whose downtown Manhattan facilities are still without power, said the storm would have a "significant" effect on its fourth-quarter earnings. Verizon said it could not yet estimate the cost of the storm, which downed cell towers across the region. Its stock fell 62 cents to $44.52.
"The information coming out from the economic impact of Sandy is a negative," said Rob Lutts, president of Cabot Money Management in Salem, Mass. "I think the markets are trying to digest that and understand that, so there is a little bit of uncertainty."
Insurers, the group that will feel the storm's effects most acutely, plunged en masse as analysts warned that the storm will eat into their income. Raymond James analysts lowered their estimates for Allstate; Barclays analysts cut theirs for Hartford Financial Services Group Inc.
The chairman of Hartford, Liam McGee, told investors on a conference call that the storm's costs are just beginning to come into focus. "It's much too early for us to provide data with any level of certainty," McGee said. He said it wasn't until Thursday that adjustors were able to view the damage to Long Island, one of the hardest-hit areas.
Hartford fell 66 cents, or 3 percent, to $21.26. Allstate dropped 49 cents to $38.56. American International Group Inc. plunged $2.52, or 7 percent, to $32.68. Genworth Financial Inc. dropped 16 cents, or 3 percent, to $6.06.
After a day of steady selling, the Dow Jones industrial average closed down 139.46 points, or 1.1 percent, at 13,093.16. The Standard & Poor's 500 index dropped 13.39, or 0.9 percent, at 1,414.20. The Nasdaq composite index lost 37.93 points, or 1.3 percent, to 2,982.13.
The day started with a burst of hope: In the last big piece of economic news before Tuesday's presidential election, the Labor Department said employers added 171,000 jobs last month, while the unemployment rate ticked up to 7.9 percent. More jobs were added in the previous two months than was first reported, the government said.
European stocks rose on the news and U.S. stocks opened higher. The Dow gained as much as 57 points in the first half-hour of trading. After that, the indexes commenced a steady slide.
All 10 categories in the S&P 500 were lower by the end of the day.