What is the overall impact of Hurricane Milton on US stocks and sectors? Via Investing.com

Inveting.com — Hurricane Milton’s impact on US stocks and sectors is large, with varying degrees of influence across industries.

As the hurricane, a powerful Category 4 storm, targets the west coast of Florida, financial analysts are already observing and projecting its repercussions in various sectors.

The Property and Casualty insurance industry is poised to feel the immediate impact of Milton. Analysts at RBC Capital Markets note that Milton could become one of the costliest storms to hit Florida, generating tens of billions in insured losses.

High insured property values ​​in heavily populated areas, combined with inland storms and flooding, contribute to anticipated financial pressure on insurers.

While many insurance companies can avoid catastrophic capital losses due to this being a fourth-quarter earnings event, the reinsurance and specialty real estate sectors are expected to face significant exposure.

With three hurricanes making landfall in Florida this season, there could be a stabilization or even a reversal of recent downward trends in commercial property prices and reinsurance.

Companies like Planet Fitness (NYSE: ) and Life Time (NYSE: ) also have exposure to the leisure sector. According to Morgan Stanley, Planet Fitness has a concentrated base of corporate locations in Florida, with about 25 percent of its corporate facilities in the state.

However, the company operates a franchise model that typically insulates it from transitory events such as hurricanes, especially given the current low season for membership additions.

As of now, the financial implications for Planet Fitness appear limited, unless the extended closings impact declining membership and new additions.

Medical technology companies are also expected to see a temporary decrease in surgical capacity as hospitals in the hurricane’s path prepare for evacuation and operational slowdowns.

BTIG Research estimates that Florida accounts for about 7.3 percent of U.S. surgical capacity, and with about 93.5 percent of Florida’s population in the path of the storm, surgical volumes could drop as much as 6.8 percent for the quarter as hospitals face with sustained closures.

However, most institutions are expected to gradually resume operations, minimizing long-term effects.

Airlines serving central Florida, especially low-cost carriers, are experiencing disruptions. According to Jefferies, about 90 percent of flights to key Florida airports such as Tampa and Orlando have been canceled, with ultra-low-cost carriers facing the biggest toll.

Airlines like Allegiant (NASDAQ: ), Spirit (NYSE: ), and Breeze saw 41%, 18%, and 44% of their flights canceled, respectively. Allegiant, which has the largest exposure to Florida at 53%, is facing severe disruption, while major carriers such as American Airlines (NASDAQ: ), Delta (NYSE: ) and United (NASDAQ: 5% of flights.​

Restaurants are particularly vulnerable, especially those with a large percentage of operations in Florida.

According to Barclays, companies such as First Watch (NASDAQ: ), Bloomin’ Brands (NASDAQ: ), Darden Restaurants (NYSE: ), Brinker International (NYSE: ) and BJ’s Restaurants (NASDAQ: ) have restaurant facilities in Florida, giving them makes it particularly sensitive to the drop in traffic during the hurricane.

Barclays also notes that while restaurant sales typically rebound following natural disasters, the combined impact of Hurricane Milton and Hurricane Helene earlier in the quarter will likely weigh heavily on fourth-quarter earnings for these companies.

Hurricane Milton’s impending landfall will also impact Florida utilities, particularly companies such as TECO, Duke Energy (NYSE: ) Florida and FP&L.

With winds currently at 150 mph and the storm expected to hit the Tampa Bay region, power outages and infrastructure damage are imminent.

According to UBS, past storms like Hurricane Ian in 2022 caused widespread outages that affected 2.7 million customers, with total damage in Florida reaching $70 billion.

However, given Florida’s strong regulatory environment, utilities are expected to recover storm costs incurred prudently through established recovery mechanisms.

The insurance industry faces another major test with Hurricane Milton as the storm approaches Florida’s Gulf Coast, expected to make landfall near Tampa.

The insurance community is remembering the lessons of Hurricane Andrew in 1992, one of the most devastating hurricanes in US history.

According to Roth, Hurricane Andrew set a precedent for how reinsurance deals respond to catastrophic events. In 1992, stocks initially fell but rebounded strongly, especially for reinsurance companies, as prices in the sector rose sharply after the event.

As insurers brace for tens of billions in losses, the anticipated increase in reinsurance prices could provide a much-needed buffer, bolstering industry resilience.

Across all sectors—from airlines to restaurants and utilities—Hurricane Milton’s impact is expected to be broad but manageable over the long term, thanks to regulatory frameworks and market adjustments.