U.S. stock and bond markets were closed on Monday and Tuesday because of Hurricane Sandy. It was the first time a stock market was shut down due to weather since a blizzard that left drifts of snow more than 40 feet high in New York in 1888. The New York Stock Exchange/Euronext announced Tuesday that trading would be suspended and would resume on Wednesday. Oil prices rose to $3 on Monday.
Circuit breakers prevent panic selling
While circuit breakers prevent panic selling, they don’t completely prevent it. They can only slow the market for a few minutes at a time to give investors time to evaluate their positions. They were implemented after the Black Monday stock market crash, which resulted in the largest one-day loss in history. However, the circuit breakers didn’t prevent the flash crash of May 2010. The US Securities and Exchange Commission revised the system to limit panic selling and increase investor safety.
The stock market has circuit breakers to stop trading when the benchmark S&P 500 Index drops by a certain amount. These breakers are not meant to prevent people from losing money, but to prevent panic-sellers from driving the prices even lower. The pause in trading is a safety valve in the event of a panic selling incident. The breakers also halt trading when stock prices reach dangerous levels.
Trades are done electronically
Following a two-day trading halt due to Hurricane Sandy, the New York Stock Exchange has decided to partially reopen bond trading on its floor May 26. The NYSE’s floor will be cleaned frequently and new safety measures will be put in place. Floor brokers will wear face masks and have their body temperatures checked before entering the trading floor. Workers and visitors will also be asked to avoid taking public transportation during the closure.
The New York Stock Exchange has a history of shutting down during the most significant national tragedies. In 1873, the exchange closed for ten days to mourn the Panic of 1873. In 1865, it closed for one week in memory of President Abraham Lincoln. As a result, many investors feared a halt to trading of bonds. Today, investors can look forward to the return of bond trading on the New York Stock Exchange.
Transactions are completed on the following day
Despite the massive disruption, the New York Stock Exchange (NYSE) will continue trading bonds on the following day. This is good news for investors, because most of their orders will be filled by another exchange. While the NYSE has previously suspended trading on bond contracts because of the terrorism attack, the exchange halted all electronic trading. Although the NYSE initially announced that it would continue operating electronic trading, it later canceled the entire day’s trading, citing security concerns. In addition to individual investors’ mistrust of electronic trading, events like the May 2010 Flash Crash have soured their mood.
The NYSE will resume trading on the following day. Typically, the New York Stock Exchange is open from 9:30 a.m. to 4 p.m. EDT on weekdays. However, on some days, the stock exchange will shut early for holiday closures. Moreover, the bond market will close early on Friday (Maundy Thursday) and will reopen only on the following day at 9:30 a.m. ET. However, the stock market will still remain closed on some holidays, such as the day after Thanksgiving, known as Black Friday. The stock market will also close early for Thanksgiving and Maundy Thursday (the day after Thanksgiving). However, the stock market will resume trading on Monday.
Oil prices jumps $3 on Monday
The price of oil surged over three percent on Monday as the U.S. killed a top Iranian commander, dampening any potential New Year rally. But the market soon returned to supply concerns and the attack on Saudi Arabian crude facilities triggered the biggest price jump in 30 years. The U.S. dollar was higher as the European Union proposed sanctions against Russia over its role in the production of oil.
The rise in oil prices reflected a collapse in the global equities market. The Nasdaq Composite was down more than 1% on Friday, and the S&P 500 and Dow Jones Industrial Average erased their year-to-date gains. But the energy complex remains an important indicator of the health of the global economy, and is highly correlated with stock market fluctuations. Financial markets have been hit by a variety of concerns including the U.S.-China trade war, fears of inflation, and a rise in borrowing costs. Meanwhile, Italian economic concerns have led to higher bond yields.
Markets are volatile
As Hurricane Sandy heads toward the financial district of the USA, the stock markets and bond trading association are closed Monday. Trading was to resume Wednesday, which is an important trading day for Wall Street. The last day of the month also marks the deadline for closing stock-related options trades. As a result, all open orders will be canceled. The NYSE has a back-up facility that can withstand severe weather.
The resumption of bond trading came at the right time. On Monday, Fed Chairman Powell emphasized the need to raise rates aggressively. He noted that inflation is too high. The strong performance of Wall Street’s stocks last week proved the underlying confidence of the market, despite the many headwinds. A day after Powell’s comments, the New York Stock Exchange resumed bond trading. After all, President Biden is headed to Europe for urgent meetings with NATO and allies.