S&P 500 Falls as Insurance Stocks Drop, Super Micro Soars on AI Demand
- S&P 500 fell 1% on Monday as Hurricane Milton intensified in the Gulf of Mexico.
- Insurance stocks were hit hard, while Super Micro Computer (SMCI) soared on AI-driven demand.
- Oil prices surged, adding to the stock market downturn as rate-cut expectations dimmed.
The S&P 500 started the week with a 1% decline on Monday, October 7, 2024, as investors digested a combination of surging crude oil prices, a stronger-than-expected jobs report, and the growing threat of Hurricane Milton. These factors tempered the stock market’s enthusiasm as expectations for additional Fed rate cuts weakened.
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Insurance Stocks Sink as Hurricane Milton Approaches
As Hurricane Milton strengthened, shares of major insurance companies dropped sharply on fears of widespread damage. Everest Group (EG), a provider of insurance and reinsurance, experienced the steepest decline in the S&P 500, falling by 8.5%. Arch Capital Group (ACGL) lost 6.2%, and Assurant (AIZ), which insures homes, cars, and lifestyles, was down 5.5%.
The hurricane is expected to make landfall along Florida’s Gulf Coast later this week, raising concerns about heavy losses for insurers.
Technology Stocks in Focus: Super Micro Computer Surges
While insurance stocks suffered, Super Micro Computer (SMCI) soared by 15.8%, leading the S&P 500. The server and data storage provider reported strong deliveries of its graphics processing units (GPUs), fueled by rising demand for artificial intelligence (AI) products. The company also launched new liquid cooling products designed to help AI companies reduce energy costs.
Air Products and Chemicals (APD) shares surged 9.5% after reports surfaced that activist investor Mantle Ridge had taken a $1 billion stake in the industrial gas maker. The investment firm is expected to push for changes in Air Products’ capital allocation strategy and leadership.
Oil Prices Surge, Power and Footwear Stocks Decline
Crude oil prices rose sharply on Monday, driven by escalating Middle East tensions and the potential impact of Hurricane Milton on global oil supply. Meanwhile, Vistra (VST), a Texas-based power generator, fell 5.2% after hitting record highs the previous week.
Deckers Outdoor (DECK) dropped 4.8% following a downgrade by Seaport Research from “buy” to “neutral,” citing weakening demand for its Ugg and Hoka footwear brands during the back-to-school shopping season.
Generac Gains as Hurricane Approaches
Shares of Generac Holdings (GNRC), which manufactures home generators, jumped 8.5%, reaching a two-year high as Hurricane Milton approached the Southeast U.S.. Generac has seen similar price boosts in 2024 during hurricane season, including the lead-up to Hurricanes Helene and Beryl.
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