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Irma market impact: Storm could send insurance, restaurant shares reeling, boost construction stocks

  • Hurricane Irma is barreling toward the Florida peninsula as one of the most powerful Atlantic storms in a century.
  • J.P. Morgan believes the cost of the two hurricanes will exceed $260 billion.
  • The firm found which subindustries and stocks rose or fell after hurricanes cause more than $25 billion in damage to the U.S.
People purchase plywood at The Home Depot as they prepare for Hurricane Irma on September 6, 2017 in Miami, Florida. It's still too early to know where the direct impact of the hurricane will take place but the state of Florida is in the area of possible landfall.
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People purchase plywood at The Home Depot as they prepare for Hurricane Irma on September 6, 2017 in Miami, Florida. It's still too early to know where the direct impact of the hurricane will take place but the state of Florida is in the area of possible landfall.

JPMorgan looked at the worst hurricanes in the last half century and found which sectors and stocks consistently declined or rose in the 20 days surrounding landfall.

Hurricane Irma is barreling toward the Florida peninsula as a category 4 storm, according to the U.S. National Hurricane Center, and ranks as one of the most powerful Atlantic storms in a century. J.P. Morgan honed in on the five hurricanes which caused damages greater than $25 billion: 2005 Katrina, 2012 Sandy, 1992 Andrew, 2008 Ike and 2005 Wilma.

"The most significant impact on equity performance is seen at the stock and sub-industry level" rather than in the aggregate market, a team of J.P. Morgan analysts wrote in a note.

With Irma hot on the heels of Harvey, which brought unprecedented, tragic flooding to the Houston area, J.P. Morgan believes the cost of the two hurricanes will exceed $260 billion – or over 50 percent of the combined $520 billion in losses from the last 50 years.

Looking at the 10 days before and after a major U.S. landfall, J.P Morgan found five subindustries which rose by around 2 percent or more: distributors, construction materials, automobiles, diversified financial services and air freight & logistics.

On the opposite end of J.P. Morgan's subindustry spectrum are the bottom five, led by independent power producers & energy, which consistently tanks 7.9 percent when mega storms strike the U.S.

A look at S&P 500 stocks revealed several notable beneficiaries, such as power infrastructure firm Quanta Services and construction materials provider Eagle Materials, which J.P. Morgan showed shares rose by 7 percent or more during a major hurricane.

Potential damage from Harvey and Irma could be even worse than hurricanes of previous years because of the wide paths they cut across Texas and Florida and that could also mean a bigger reaction in these stocks, J.P. Morgan said.

Restaurant stocks such as Buffalo Wild Wings and Cheesecake Factory took hits of 4 percent or more during past devastating storms.

With sustained winds as strong as 150 miles per hour, officials expect Irma to slam southern Florida on Sunday and make its way across the state toward Georgia.