Airlines Boosted by Higher Traveler Numbers
The S&P 500 was down yesterday, but airline stocks fared much better. United, American, Southwest and Delta all closed on the day despite a general market slump because of positive data from TSA. The agency reported that it screened a million daily passengers for the first time since the beginning of the pandemic.
This is great news for the industry because it shows the growing willingness for consumers to return to air travel. The trend has also been positive because the growth has been steady since daily lows in April.
However, the future is not all bright for the airline industry. If a new stimulus package does not get pushed through, it’s likely airlines will cut routes. This, of course, would reverse the positive trend in traveler data.
Additionally, this can be a lesson to investors. Nothing is significantly different in the airline industry if 990 thousand travelers fly a day or 1 million travelers fly. However, crossing that threshold created an emotional reaction in investors that pushed airline stock prices up. The market showed a small correction in the afternoon. While each of those airlines closed on the day, they all closed more than 2% below their mid-day highs. Still, this can be an important reminder of how emotions play into stock prices.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.