What happened

It's Friday, and the stock market is looking optimistic again, with the Dow, the Nasdaq, and the S&P 500 each up about 1.5% in midday trading.

What are the bulls snorting so happily about today? As The Wall Street Journal and Xinhua News Agency report, trade negotiators for the United States and China are restarting talks on implementing the Phase 1 trade deal that they signed in January. President Trump had previously threatened to end this deal, and continues to express some doubts about it. But the prospect that the two sides may be moving forward again, combined with reports that the U.S. economy is starting to reopen for business, appears to have investors feeling broadly optimistic today.

Shares of Boeing (NYSE:BA), responding positively to this news, were up about 3.3% as of 1:20 p.m. EDT on Friday. And the stock of Boeing supplier Spirit AeroSystems (NYSE:SPR) was up 8%, while Boeing customer American Airlines (NASDAQ:AAL) was up 3.6%.

Collage of an airplane, coronaviruses, and a world map

Image source: Getty Images.

So what

But some of the enthusiasm we saw earlier in the day is fading. Just before noon today, the European Commission issued a recommendation to its member states that the temporary restriction on nonessential travel to the EU, which was due to expire on May 15, should be extended until June 15.

Phrased as an "invitation" rather than an order, the move is not binding. Still, one would assume that most EU states will err on the side of caution and extend the restriction as advised.  

Now what

It's not hard to see what this means for the three companies above: fewer flights to and from Europe for American Airlines; less demand for new airplanes, and for maintenance services on existing airplanes, for Boeing; and fewer parts needed from Spirit AeroSystems.

Consequently, we're seeing all three stocks fade as the day progresses, and news of the EU's advice filters out into the market.

So what's the moral of this story? Certainly, the prospect of a trade agreement between the world's two leading economic powers is a reason for optimism, but the world today isn't what it was three or four months ago. With COVID-19 still rampant, and still affecting policies for entire economic regions, it's crucial that investors not take their eye off the ball.

The coronavirus, not a trade deal, is still the driving force behind stocks today. Until we get this disease licked, any gains our stock portfolios see have to be considered conditional.