Airline stocks rose sharply Thursday after oil prices gave up earlier gains.
The Amex Airline Index added 2.7 percent to 23.44 in afternoon trading. The broader market also advanced, with the Dow Jones industrial average adding 0.4 percent to 12,953.66.
Oil prices shot higher but then retreated later in the session. Analysts attributed the swing to the expiration of options and a sharp drop in natural gas prices. Light, sweet crude for June delivery fell $1.91 to $122.31 a barrel on the New York Mercantile Exchange after rising as high as $126.64 earlier in the session.
Airline shares are sensitive to movements in the energy markets because fuel now represents most carriers' biggest expense. The sector traded marginally lower earlier in the session.
US Airways Group Inc. was among the sector's biggest gainers, jumping 44 cents, or 6.1 percent, to $7.69. Market leader AMR Corp., the parent of American Airlines, added 43 cents, or 4.7 percent, to $9.54.
Moody's Investors Service cut its liquidity rating on United Airlines and parent UAL Corp. amid concerns about higher fuel costs, a slowing economy and rising costs. The rating firm also lowered the outlook on the rating to negative from stable, although it left the carrier's debt ratings unchanged.
A day earlier, the firm cut Alaska Air Group Inc.'s credit outlook to negative, while Fitch Ratings cut JetBlue Airways Corp.'s debt ratings further into junk status on fuel and economic worries.
UAL shares rose 57 cents, or 4 percent, to $14.74. Alaska shares increased 51 cents, or 2.4 percent, to $21.67, while JetBlue shares gained 12 cents, or 2.5 percent, to $4.94.
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