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The stock market has been rocky this week as investors digested escalating tensions in the Middle East as Iran opened an attack on Israel. Simultaneously, the International Longshoremen’s Association went on Strike at 12:01 a.m. on October 1, shutting down ports along the East and Gulf coasts. Adding fuel to the fire, hurricane Helene shattered lives of millions from Florida to Tennessee. Western North Carolina is forever changed. Catastrophic flooding and raging rivers washed away towns and claimed hundreds of lives. All of those affected are in our prayers as well as those working around the clock to restore power and provide relief to those in need.
Major Index Performances (as of Thursday Close):
- S&P 500: The benchmark index dropped about 0.68%.
- Dow Jones Industrial Average: The Dow lost 0.71%,
- Nasdaq Composite: The index lowered 1.13%.
Iran launched a significant missile attack on Israel earlier this week, firing nearly 200 ballistic missiles, most of which were intercepted by Israel’s defence systems, but a few managed to hit central and southern Israel. The attack caused damage to infrastructure and vehicles, but there were no reported casualties. Isreal responded with airstrikes in Beirut, specifically targeting key areas in and around Hezbollah. The situation remains tense with the potential escalate into a full-blown war.
The conflict is responsible for higher oil prices due to concerns about supply disruptions. Market volatility wasted no time reminding us that uncertainty is the catalyst to erratic trading. Gas and Oil stocks such as Exxon/Mobil (XOM) and Chevron (CVX) rallied on these developments. Fortunately, earlier this year the United States re-established itself as a net exporter of oil, which helps the US when oil prices rise.
At 12:01am, October 1st, the International Longshoremen’s Association went on strike, shutting down 36 ports from Maine to Texas, including our home port here in Wilmington NC. You may be hearing about panic buying across the country. Toilet paper and paper towel isles remind us of the Covid era. Ironically, over 90% of those products are produced in the United States and will not be affected by the strike. The biggest disruptions will be in perishable goods like fresh produce and seafood. The strike is expected to cost the economy $5 billion a day. . Fortunately, many companies had the foresight to increase inventory. As of this writing, business have approximately two months of inventory. Fortunately, a major hit to the economy won’t happen since the strike has been postponed while negotiations take place. At least for now, things will go back to normal.
Hurricane Helene made landfall on September 26th and left a path of destruction throughout the southeast. Western North Carolina experienced record rainfall and catastrophic fooding. The death toll for Helene, the deadliest hurricane since Katrina, as of this writing hit 215 and continues to rise. Asheville and surrounding towns have been decimated and it could take years to rebuild.
The financial impact of Helene is staggering, with losses potentially reaching $160 billion. The storm caused extensive damage to homes, businesses and infrastructure, particularly in NC. Many businesses have been forced to close. The cost of recovery is expected to reach $34 billion, which includes insured and uninsured losses, with many areas having low flood insurance coverage.
Helene’s destruction will have a major economic impact, but it’s the emotional impact that is also devastating. All of us at Omnistar either have family or good friends who have been affected by the hurricane. Our hearts and prayers go out to everyone who has been affected by the storm and dealing with the aftermath. In our Monday morning meeting we agreed that there would be no complaints this week, as we have so much to be thankful for, and so many are struggling just to survive. Please keep everyone affected by Helene in your prayers.
Have a wonderful weekend,
Your Portfolio Management Team
