Travelers stock bends the knee as Hurricane Milton threatens to follow up Helene

• Travelers stock sinks as Hurricane Milton approaches Florida.
• Insurance stocks are trending lower with new hurricane reaching Category 4.
• Hurricane Helene is said to have caused as much as $47.5 billion in flood and wind damage.
• Dow Jones edges lower as Middle East tensions and Treasury reinversion affect sentiment.

The Travelers Companies (TRV) is faring the worst among Dow Jones Industrial Average (DJIA) stocks at the start of the week. At the time of writing, shares of the multi-pronged insurer are trading 4% lower after lunchtime in New York, while the Dow leads the NASDAQ and the S&P 500 lower, shedding 0.7%.

The market is taking a breather after its run-up last Friday following an impressive Nonfarm Payrolls (NFP) report showing a surge in September job growth. The main point of interest this week is Thursday’s Consumer Price Index (CPI) for last month.

But at present, traders are eyeing the brief reinversion of the 10-Year/2-Year Treasury curve. Additionally, Hurricane Milton has become a Category 4 storm and is set to reach Florida by Wednesday as state officials call for an evacuation of 51 counties and counting. 

After all that, the market still expects Israel to respond militarily to Iran’s missile attack from last week. Rumors have been floated that Israel could attack oil field assets and refineries in Iran or even nascent nuclear capabilities. This latter event has sent oil prices higher and reduced risk-on sentiment.

Travelers stock market 

A major report in The Financial Times of London says that 2023 was the worst year since at least 2000 for US home insurers. These insurers experienced $15.2 billion in net underwriting losses on their homeowner portfolios, according to ratings agency AM Best. That figure was about twice the loss experienced in 2022.

With Hurricane Milton barreling through the Gulf of Mexico toward Orlando, Florida as we speak, traders can be forgiven for getting out of homeowner insurance stocks. Many in the market don’t want to experience another Hurricane Helene, which made landfall just two weeks ago and wreaked havoc across Florida, Georgia and North Carolina. 

The SPDR S&P Insurance ETF (KIE) has traded 3% lower at the time of writing on Monday. This comes just after the ETF had resurrected itself last week following Hurricane Helene’s onslaught. 

That prior hurricane is thought to have caused up to $47.5 billion in damage to properties across 16 US states, based on data from CoreLogic. Most of those losses were uninsured, however, since most homes are not required to carry flood or wind insurance. At least 232 people were killed by the hurricane as well, making it the second-most fatal US storm in the past half century.

Travelers stock forecast

Travelers stock has risen some 20% year to date, and its most recent quarter saw impressive profits. This might mean that prospective investors will look for a good entry point this week.

TRV stock is already sitting near the 50-day Simple Moving Average (SMA) at $226. This is well off its recent all-time high of $243.48 on September 17. The current pullback that has been taking place over the past three weeks has dropped below April's resistance at $232.

A break of the 50-day SMA, which looks likely, will send shares drifting toward the 100-day and 200-day SMAs that trade from $216 to $218. Below here is a large demand band from $200 to $208.

TRV daily stock chart