Insurers drive stocks higher; Dow gains 254 points

NEW YORK — So much for Irene.

Stocks rose broadly Monday, led by insurance companies, after it became clear that the tropical storm caused far less damage than many had feared. An increase in U.S. consumer spending also helped, as did a rare piece of good news from Greece: a merger of two major banks.

The Dow Jones industrial average jumped 254 points.

Trading volume, or the number of shares bought and sold, was the lowest since July 26 as many traders struggled to get to work in Lower Manhattan or were on vacation.

Insurance stocks rose sharply as analysts lowered their estimates of how much damage the storm would cause. Allstate Corp. rose 8.5 percent, Hartford Financial Services Group Inc. rose 13 percent, and Travelers Cos. Inc. rose 5.1 percent. Insurance and banking stocks in the Standard & Poor's 500 rose 4.2 percent, the most of the 10 company groups that make up the index.

Kinetic Analysis Corp., a consulting firm, sharply lowered its estimate of storm damage from $20 billion late Thursday to $7 billion late Sunday as the storm weakened. Of that amount, insurers would probably have to cover up to $3 billion, Kinetic said. That's less than the $6 billion the industry paid after Hurricane Isabel struck the region in 2003.

"The U.S. came more or less unscathed through the hurricane," said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group. "The cleanup isn't going to cost as much as anticipated."

Utilities companies also rose after it became clear their storm-related expenses would be lower than earlier estimates. Duke Energy Corp., which serves customers in the Carolinas, rose 1.1 percent. New York's biggest utility company, Consolidated Edison Inc., rose 1.3 percent.

The New York Stock Exchange and other major U.S. exchanges opened as usual Monday after making extensive preparations over the weekend. At the NYSE, executives brought in dozens of cots so employees could sleep there to be ready for the opening bell.

The Dow Jones industrial average rose 254.71 points, or 2.3 percent, to close at 11,539.25. It is now down just 0.3 percent for the year. It had been down as much as 7.4 percent for the year on Aug. 10.

The Standard & Poor's 500 index rose 33.28 points, or 2.8 percent, to 1,210.08. The widely used market benchmark is now up 8.1 percent since Aug. 8, when it hit low for the year because of a downgrade of the U.S. government's credit rating.

The technology-focused Nasdaq composite index rose 82.26, or 3.3 percent, to 2,562.11.

Share This Story