Sandy likely won't affect stock prices long term

• Median gains for S&P 500 of 3% to 6% one, three and six months after storm
• One exception: Hurricane Ike in August 2008 and a crisis-fueled market free fall

NEW YORK -- Hurricane Sandy has forced stock trading to cease, for now. But history says the destructive storm unlikely won't have a long-lasting effect on stock prices.

"History says that hurricanes typically don't trigger market declines," notes Sam Stovall, chief investment strategist at S&P Capital IQ, writing in a morning research note titled "Canes and Gains."

"Individually, the market's performance following major hurricanes has been uneven, as equities are more likely driven by wider-reaching global events than localized natural disasters," Stovall writes in an S&P Capital IQ analysis of post-hurricane market movements.

Indeed, the Standard & Poor's 500 has posted median gains of between 3% and 6% in the one-, three- and six-month periods following the 13 most-costly hurricanes dating back to 1965, Stovall's data show.

In fact, in the aftermath of Hurricane Katrina in August 2005 -- easily the most costly storm on record -- the stock market was flat one month later, but 4% higher three months later and up 6% six months out.

The worst post-hurricane market performance came in August 2008, after Hurricane Ike. Stocks were already in free fall because of the collapse of housing prices and the securities backed by mortgages and other assets.

Following Ike, the market was down 9% one month later, off 30% three months later and 43% lower six months later. Those losses can reasonably be blamed on a full-blown banking crisis, the Great Recession and stomach-churning fear that enveloped the market as the second worst bear market in history played out.

The U.S. stock market has not been closed due to weather since Friday, Sept. 27, 1985, when Hurricane Gloria forced the closure of all U.S. markets. The longest recent shutdown, although not due to weather, totaled four days following the September 11 terrorist attacks.

Investors hate uncertainty and part of that uncertainty right now is not knowing when markets reopen, along with, of course, not knowing how big the damage from Hurricane Sandy will be.

What investors do know is that when markets reopen, investors still face the same problems and obstacles they faced before Hurricane Sandy came roaring in from the Atlantic Ocean: the USA's fiscal problems, subpar economic growth and uncertainty surrounding the outcome of rapidly approaching presidential election.

"After the storm and the elections, the market can get back to obsessing about the severe economic and financial damage, if we fall off the fiscal cliff," Edward Yardeni, chief investment strategist at Yardeni Research, said in a morning note to clients.

"Investors have every reason to be on edge, as they await the conclusion of natural, corporate, and political events," Stovall added, in his morning note. "Our belief is that November will be a month to remember. We project share price action for the remainder of the year to be choppy, but with a slight upward bias."

"Soon," Stovall wrote, "the uncertainty surrounding these events will have died down, only to be replaced by the swirling winds of contention surrounding the lifting of the debt ceiling and the resolution of the fiscal cliff."

And closed stock markets don't translate into canceled earnings reports, says Greg Harrison, an earnings analyst at Thomson Reuters. More than 100 companies in the S&P 500 are scheduled to report earnings this week.

Quite a few companies scheduled to report earnings Monday postponed their reports. Drug maker and Dow component Pfizer is one of the companies that put its earnings on hold until after the storm.

Harrison told USA TODAY: "Since (companies) usually issue these reports outside of market hours, they can still do so tomorrow. Things could change based on the location of a particular company, but I think that some or most scheduled companies will still be reporting earnings Monday and Tuesday."

In handicapping the impact of the market closure on actual price movements, Andrew Busch, a public policy strategist at BMO Capital Markets, says: Closed markets "should reduce volatility, but reinforce trends already in place: a stronger U.S. dollar, weaker U.S. stocks and lower bond yields."

And the lack of trading due to closed markets could make it tough for investors to get a read on how next Tuesday's presidential election between President Obama and GOP challenger Mitt Romney will play out,

Until markets reopen, there will be no movement in either Obama-friendly stocks or names that would do well in a Romney-driven portfolio, one market watcher says.

(The market closing is an) "unusual event but understandable," says David Kotok, chief investment officer at Cumberland Advisors. "(But it does) make things fuzzy for discerning a post- election market since the market's discounting mechanism is interrupted at a critical time in the election cycle."

If the closing does have an impact, it will likely occur if the market is closed for longer than expected. Right now, Monday and Tuesday closings are expected.

"I guess the question is when will the stock markets reopen" says Richard Suttmeier, chief market strategist at ValuEngine.com, adding that he hopes stock trading resumes at least by Wednesday, the last day of October.