U.S. stocks opened sharply higher on Monday as the damage from Hurricane Irma didn’t appear to be as bad as feared.
The Dow Jones industrial average rose 173 points, with Travelers Cos. contributing the most to the gains.
The S&P 500 gained 0.6 percent, with financials rising more than 1 percent to lead 10 sectors higher. The Nasdaq composite popped 1 percent, as large-cap technology stocks like Facebook and Apple rose more than 1 percent.
Hurricane Irma, once a Category 5 hurricane, hit the coast of Florida over the weekend. On early Monday, Irma continued to thrash the state, after slamming the Keys, Miami and other areas nearby in recent days.
The hurricane has gradually lost strength, however, and has been downgraded to Category 1 as it continues to move its way across land. Storm surges were also much smaller than the National Hurricane Center expected.
“We think Hurricane Irma could be a top 5 most costly hurricane in the U.S, although the losses could be in-line-to-lower than market expectations,” Sarah DeWitt, an analyst at JPMorgan, said in a note Monday.
“Catastrophe modeler AIR Worldwide expects industry insured losses of$20-$65 [billion] … based on the track as of Friday evening, and our sense is losses could be at the lower end of the range as the storm weakened faster than expected.”
Hurricanes have put markets on edge over recent weeks, as investors show signs of unease when it comes to assessing the impact of these natural disasters on certain markets, including insurance and airlines.
Shares of Travelers Cos., Progressive and American International Group rose 5.5 percent, 3.9 percent and 1.8 percent in early trade, respectively. Everest Re Group and XL Group saw their shares soar 8.5 percent and 7.3 percent, respectively, and were the best performers in the S&P 500.
The anticipation of Irma making landfall in Florida initially raised concern over U.S. economic growth. In fact, economists at Goldman Sachs lowered their third-quarter GDP estimate to 2.0 percent from 2.8 percent on Saturday noting, “We find that major natural disasters are associated with a temporary slowdown in most major growth indicators.”
Gold and U.S. Treasurys sold off Monday as investors lowered their exposure to traditional safe haven assets. The benchmark 10-year note yield rose to trade at 2.115 percent while gold futures for December delivery dropped 0.9 percent to $1,338.80 per ounce.
Geopolitical tensions are also set to be back on the menu Monday as the United Nations Security Council is expected to vote on Monday on a resolution regarding North Korea, according to Reuters.
Tensions between the Asian country and the West have escalated as of late, after North Korea failed to back down on its continuation of missile launches.
Investors were relieved, however, after North Korea’s dictator, Kim Jong Un, chose to hold a party over the weekend, instead of opting for another missile launch. North Korea did say on Monday that the U.S. would pay a “due price” for spearheading a U.N. resolution against the country’s recent nuclear test, according to Reuters.
— CNBC’s Christina Wilkie and Reuters contributed to this report