Why Stocks Drifted Around on Light Volume
With the pressure on to open markets Wednesday, you'd think there would be some kind of high-volume move, either up or down. But no: a modestly positive open has devolved into a grind, with light volume and the advance/decline line almost even. (Read more: Stocks End Flat, Dow Declines 2.5% for October)
Why is there not a lot of enthusiasm? Several reasons:
1) at least half of the New York-based traders seem to be out. Those that are in — no matter where they are — are not trading heavily;
2) Hurricane Sandy was worse than thought (the opposite of Irene); there is uncertainty about how long transportation and infrastructure will be out, what will the economic cost be in terms of lost revenues, etc.
3) Hurricane Sandy ate my homework. You know this is coming: firms will start blaming the economic impact of the hurricane for weak Q4 earnings.
4) Electoral uncertainty. The upcoming election is partly a referendum on Fed Chairman Ben Bernanke's policy of aggressive monetary easing. (Read more: Fed to the Rescue? Wall Street Talks of 'QE Sandy')
5) Then there's the Greek coalition, which seems to be fraying at the edges (Greek stocks down another two percent today, down 10 percent in the past five days.
Post-mortem on the 2-day closing:
NYSE CEO Duncan Niederauer on how to address the next natural disaster: "My advice for the next would be the following: we should have decided as an industry sooner than Sunday what we were doing about Monday. That's the mistake."
Good point. He went on to say: "I think you'll see the industry rally around mandatory testing and the contingency plans." In other words, expect the SEC to get involved and require clearer rules for testing backup plans for emergencies.
As for the second-guessing going on about the decision to close, here is what one knowledgeable market participant messaged me:
"This really wasn't the NYSE's fault, they were ready to go - I was on the conference call - it was really the whole industry that pushed to close. The thinking was that if markets are open, every firm will feel obligated to be open. And at minimum it requires dozens of staffers at each firm to operate block trading, program trading, electronic, derivs, options booking and clearing, legal and compliance people need to be onsite, engineers and security, janitors, etc. Add it all up and you are asking thousands of people to come in when many buildings were in zones getting evacuated. It just didn't make sense with widespread flooding and power outages.
Bottom line is that electronic trading or not, there are lot of people still involved in staffing trading desks throughout the Street, and those people almost all still live and work in NY."
—By CNBC's Bob Pisani
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