U.S. residents on the East Coast in the path of Hurricane Florence are preparing to weather the arrival of what is now a Category 4 storm. Meanwhile, on Wall Street, investors were doing their own work ahead of the hurricane: placing bets on which companies would rise or fall if it turns out to cause massive destruction.
Florence is the most powerful storm to approach the U.S. mainland so far this year. Starting on Thursday, when it’s expected to make landfall, the hurricane could bring winds up to 130 miles an hour and the risk of severe flooding. States from the Carolinas to Maryland are bracing for the impact.
As daunting as the storm seems, stock market investors recall that the damage from past hurricanes have weighed down insurance companies, while creating more business for home improvement stores, building supply companies and local construction firms.
On Monday, investors were busy adjusting their positions in various companies. Insurers were down amid concern that severe damage could lead to a surge in claims. Allstate stock dropped 2.2%, while Travelers Companies dipped 2%.
Home Depot and Lowe’s, meanwhile, both advanced to record highs. Shares of Home Depot rallied 2.2% to $210.69, while Lowe’s rose 2.6% to $112.39 a share. Generac Holdings, which makes generators used during power outages, rose even further with a 5.5% gain.
Louisiana-Pacific and Fluor, two construction companies active on areas in Florence’s path, both gained about 1%. Beacon Roofing Supply surged 7.9% to $41.14 a share.
Companies in the travel industry also proved popular with investors, amid expectations that a severe storm could put sudden demand on car rentals. Hertz Global Holdings rose 3.6% while Avis Budget Group gained 2%. Last year, storms that hit Houston and Forida left many residents looking for last-minute means to drive to safer ground.
While meteorologists are watching Hurricane Florence closely, it’s not clear whether it will increase in strength or taper out this week. If the storm isn’t as dangerous as some fear right now, however, investors who tried to capitalize on the storm’s impact could regret their investments this week.