One street that managed to avoid Harvey's torrential flooding was Wall Street. In the week immediately following Harvey's landfall as a Category Four hurricane and flood-inducing tropical storm, the stock market seemed to shrug off the news and continue on its months-long upward trend. Heading into Labor Day weekend, the Dow Jones Industrial Average was up more than 110 points since Harvey struck, while the S&P 500 saw five straight days of gains immediately following the storm.
Positive results on Wall Street in the wake of a natural disaster aren't necessarily a surprise to financial experts. "The market is incredibly counter-intuitive, so what is a tragedy to us personally is seen as an opportunity for Wall Street," says Richard Rosso, Houston-based financial planner. He tells KTRH that the storm recovery efforts will actually create new economic activity. "Even though there is disruption, you might see a slight pickup in GDP (Gross Domestic Product) with rebuilding. Think of it as a regional economic stimulus project...unfortunately it's hit us," says Rosso.
In particular, the aftermath of the storm could be a boon to stocks related to repair and rebuilding. "Think of companies that create lumber or drywall," says Rosso. "You're going to see companies like that getting a boost, based on the tragedy." Indeed, shares of Lowe's, Home Depot and Beacon Roofing Supply have all seen solid gains in the days following Harvey. Those gains are helping to drive the already strong stock market. Call it reverse optimism. "Wall Street will look at (the storm) and say there's going to be a boost in (economic) activity that's going to occur after the hurricane," says Rosso.