Los Angeles wildfires send Travelers stock tumbling as Dow Jones reels from hot job market

• AccuWeather estimates damage from the LA wildfires could reach $150 billion.
• JPMorgan estimates insured losses worth $20 billion.
• Chubb, Travelers and Allstate are the most affected by the fires.
• The December NFP in the US showed a drop in the unemployment rate, making it likely that the Fed will keep rates unchanged.

The news continues to be bad at the start of 2025 for US stock investors. What at first appeared to be a somewhat confined wildfire in the upscale Pacific Palisades neighborhood north of Los Angeles on Tuesday has turned into a at least five separate fires are devastating the city. Estimates have exceeded $100 billion in total economic losses, and a good portion of that responsibility will surely fall on The Travelers Companies (TRV).

TRV shares fell 4.5% on Friday as the fires entered their fourth day and California officials now estimate that up to 10,000 structures have been damaged. On Wednesday, that number was just 1,000.

Travelers’ main index, the Dow Jones Industrial Average (DJIA), collapsed to new range lows not seen since Nov. 5, 2024. The DJIA plunged 1.5%, slightly outperforming the NASDAQ’s 1.6% selloff. The December US Nonfarm Payrolls (NFP) report was released in the morning session, showing intense hiring activity and a drop in the unemployment rate to 4.1%.

While this NFP may be a good sign for workers, the market is unhappy as a tight labor market gives the Federal Reserve (Fed) less impetus to cut interest rates. Wall Street currently does not expect any further rate cuts until June at the earliest.

Travelers Stock News

AccuWeather, a weather forecaster, sharply increased its estimates of economic losses from the LA fires from a range near $55 billion on Wednesday to a range between $135 billion and $150 billion by Friday. At least five people have died so far, but this number could increase as the fires are not yet under control.

However, this is not the same as insured losses, which JPMorgan estimates at around $20 billion. Three insurance companies are believed to be Chubb Limited (CB), Allstate (ALL) and Travelers — are the most affected by the destruction. That estimate is being updated, however, as facts change. On Wednesday, the figure stood at $10 billion.

Neighborhoods near the simultaneous fires quickly ran out of water to fight the fires and could not be resupplied in some cases due to low water pressure. City officials said the water tanks supplied enough water to fight several single structure fires at once, but not enough to fight fires that engulfed entire neighborhoods.

Nearly 200,000 Angelenos have been evacuated, and experts are calling it the costliest wildfire in the nation’s history, although far fewer people have died compared to many other fires that hit more rural settings.

Jimmy Bhullar, an analyst at JPMorgan, said he expects the vast majority of insurance losses to be tied to home insurance rather than commercial policies.

“To the extent that primary insurers are affected, reinsurers would also be affected,” Bhullar said in a note to clients. “However, compared to previous fire-related losses, we expect primary insurers to incur more losses and reinsurers to incur fewer, mainly due to increased reinsurance attachment points from 2023.”

Travelers Stock News

Travelers stock was already in a downtrend since recording the second leg of a double top pattern on November 29. TRV stock momentarily fell below the $232 October 2024 support level during Friday’s session, meaning traders should expect the decline to continue.

With the 100-day SMA showing resistance lately, the 200-day move near $229 seems likely. Below there, TRV could fall to the $200 to $208 demand zone from last July. Therefore, it is essential that TRV remains at that 200-day average.

TRV Stock Daily News