extreme weather caused by the first el niño event in seven years could extinguish the scorching stock market charles schwab cautioned this week evoking a littlediscussed factor that could potentially send inflation surging once again the economic effects of extreme weather events such as record temperatures globally and the canadian wildfires possibly soon to be accelerated by el niño “could be significant for both inflation and economic activity” jeffrey kleintop charles schwab’s chief global investment strategist wrote monday though “weather rarely has a material impact on overall markets” kleintop predicts this time could be different given stocks’ elevated sensitivity toward inflation and the likelihood price hikes associated with severe weather will be concentrated in food and energy as crop yields are threatened and energy grids feel the pain from people trying to stay cool the potential rise in food and energy prices would coincide with a growing sense of hope on wall street that inflation has subsided and the federal reserve and other central banks will curb their interest rate hike campaigns kleintop notes the last el niño event concurred with as much as a 15 decline in the sp 500 between 2015 and 2016 though that crash proved to be shortlived and is not considered to be a direct result of weather any such decline for us equities would come as a significant surprise amid their broad rally the sp is up nearly 20 year to date and more than 40 of companies listed on the index have enjoyed multidigit rallies the united nations’ world meteorological organization determined earlier this month that a new el niño event has officially begun el niño occurs when pacific ocean water temperatures rise significantly above historic levels typically bringing increased precipitation in the southern us and higher temperatures in northern states according to the national ocean service in recent years the covid19 pandemic and russia’s war on ukraine have contributed to rising inflation as well 650 billion that’s how much climate events cost the global economy from 2017 to 2019 according to morgan stanley last october the treasury department created the climaterelated financial risk advisory committee to evaluate monetary risks associated with weather and climate events “assessing climaterelated financial risk is a complex and important task and i am grateful for the willingness of this committee to take on this work” treasury secretary janet yellen said at the time el niño returns un warns of upcoming ‘surge’ in global temperatures and extreme heat forbes 5 worst disasters  how did the stock market react nasdaq