Wall Street opens lower as Hurricane Irma powers towards Florida

A trader working on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange.
A trader working on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange.PHOTO: AFP

NEW YORK (REUTERS) - US stocks opened lower on Friday as investors assessed the financial impact of Hurricane Harvey and tracked Hurricane Irma as it ploughed towards Florida.

The three major Wall Street indexes were on track to end the week lower, with many economists forecasting that third-quarter gross domestic product (GDP) will take a hit owing to the hurricanes. Irma was set to hit Florida as early as Saturday, with the Federal Emergency Management Agency (Fema) warning that parts of Florida could be out of electricity for days, if not longer.

The hurricane, the strongest recorded in the Atlantic Ocean, comes on the heels of Harvey, which shut a quarter of US refineries and 8 per cent of US oil production.

"Having two major hurricanes strike in one quarter, it is surely going to show up in the GDP," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. Harvey may end up being the most expensive natural disaster in the United States since 1980, costing US$70 billion (S$94 billion) to US$108 billion, according to BofA Merrill Lynch.

The brokerage cut its estimate for third-quarter US GDP growth by 0.4 percentage points to 2.5 per cent.

At 9.37am ET (9.37pm Singapore time), the Dow Jones Industrial Average was down 25.63 points, or 0.12 per cent, at 21,759.15 and the S&P 500 was down 4.02 points, or 0.16 per cent, at 2,461.08. The Nasdaq Composite was down 11.69 points, or 0.18 per cent, at 6,386.18.

Gold prices rose to their highest in more than a year and the dollar index hit its weakest since January 2015 as the broader markets braced themselves for North Korea celebrating its founding on Saturday, and as Irma headed for Florida.

New York Fed president William Dudley on Thursday toned down his hawkish view, saying rates should rise only gradually given low inflation, but did not repeat an assertion three weeks ago that he expects to raise rates once more this year.

Traders have sharply reduced the odds for another interest rate hike this year. The chances of a December move are at 26.4 per cent, compared with 42 per cent a week ago, according to the CME Group's FedWatch tool. Ten of the 11 major indexes were lower, with the energy index and industrials sector among the biggest laggards.