Wall Street shrugged off the worst electrical blackout in American history yesterday as a fresh batch of indicators pointed to a tentative economic recovery. The New York Stock Exchange and Nasdaq stock market opened on time despite the power outages and soon added to their recent gains. "It's a matter of pride [to open]," said one broker.
However, markets for shares, oil, bonds, interest rates and metals all said they would close early, hampered by a lack of traders as people struggled to get into work as New York City slowly returned to normal.
The number of shares traded on Wall Street plunged. But share prices and the dollar rose after the US government confirmed the blackouts were not caused by a terrorist attack.
After an hour the S&P500 was up one point, while the Dow Jones had risen 12 points, or 0.1 per cent. The dollar was up 0.1 per cent against the euro at $1.1264. Market optimism was boosted by official figures showing that industrial output rose last month at its fastest rate since the start of the year.
Production at factories, mines and utilities rose by 0.5 per cent in July, the best outcome since January and beating expectations of a meagre 0.1 per cent rise. The report is the latest to show the hard-hit factory sector may finally be on the mend. However, the blackouts, which would have hit factories and power stations, cast a shadow over the figures. Paul Dales, an analyst at Capital Economics in London, said: "With some parts of the country losing a whole working day, there is a chance that industrial production will fall in August."
Separate figures showed that even before the blackouts manufacturing growth had slowed in New York state this month. The oil price surged to its highest level for five months as six oil refineries were shut down in the US and Canada on Thursday night, threatening already thin fuel stockpiles. Soaring prices for oil, which hit $31.51 a barrel yesterday, will hit profits margins at businesses already struggling to make headway against the worst downturn for 70 years.
Business, stock traders and economists were yesterday starting to count the cost of the blackouts. One early estimate pointed to a daily loss of $30bn from the crisis. David Rosenburg, the chief US economist at Merrill Lynch, said: "Maximum impact, in our view, is approximately $25bn to $30bn a day in terms of lost GDP."
The US's beleaguered aviation industry - already recoiling from the recession and the 11 September attack - took a fresh blow yesterday
Airlines cancelled hundreds of flights as some of the world's biggest airports struggled to restore service on Friday. American Airlines alone cancelled 183 flights.
There was a raft of anecdotal evidence of factories shutting, perishable goods being destroyed, stores staying shut and workers either failing or simply not trying to get into work. "Supply disruptions, perishables, a drop in hours worked, all point to a likely down-grade of our real GDP growth estimate for the third quarter," said analysts at Cantor Fitzgerald brokerage.
Xerox, the world's biggest manufacturer of photocopiers, said its New York facility lost power for eight hours.
Wal-Mart, the world's largest retail group, had to close 200 stores because of power shortages and had still failed to reopen 50 of them by yesterday.
The impact was felt on this side of the Atlantic. Bonds and shares in National Grid Transco fell after the UK power company's American unit was initially blamed for the blackouts. There were winners, as well. Home Depot, the world's largest home-improvement chain, said it shipped more than 5,000 generators to stores in affected states. And shares in Aggreko, the UK-based international generator equipment rental firm, jumped 6 per cent as demand for its services surged.
Meanwhile, official figures showed that inflation rose by 0.2 per cent for the second straight month in July, calming fears of a deflationary threat to the US economy.