Stock market investors were pleased on Monday at the prospect of businesses starting to reopen in many states, lifting major market benchmarks. The Nasdaq Composite (^IXIC +1.22%) didn't see quite the same level of gains as broader measures like the S&P 500, but it was still higher by about 2.4% as of noon EDT today. The Nasdaq 100 Index was higher by just under 2%.
Good news from the healthcare front in the fight toward developing a coronavirus vaccine helped lift several pharmaceutical and biotech companies within the Nasdaq. But some of the best performers were those hit hardest by the economic fallout from the pandemic. United Airlines Holdings (UAL +4.38%) led the Nasdaq 100 with a rise of 18%, while Marriott (MAR +2.56%) wasn't far behind with its 14% gain.
Flying higher
United wasn't the only airline stock to perform well Monday, but it was among the top performers in the space. Part of that stems from the unique challenges that United has had to overcome, and investors hope that any return to more-normal conditions will come as quickly as possible for the airline.
Image source: United Airlines.
In particular, United is juggling a large number of issues that could cause problems. With so few planes in the air, the need for employees like pilots, flight attendants, and mechanics is at a low. One report suggested that United will only need 3,000 flight attendants out of its workforce of roughly 25,000. Yet because of the conditions on the loans and grants that United and its peers took from the federal government, laying off those unneeded workers isn't an option until September at the earliest.
Strangely enough, one recent United incident highlighted what you might think would be the last problem airlines are facing right now: overcrowding. Social media criticism of a fully packed cross-country United flight highlighted the challenges of trying to operate the few flights for which there's still ample demand.
A viable vaccine is United's best bet for returning to business as usual. Unfortunately, that's not likely to happen terribly soon, despite best efforts to move quickly. Until it does, United is likely to see continued reluctance to fly the friendly skies from a wide swath of prospective passengers.
Hope for hotels
Similarly, shares of hotel-related companies were higher on Monday. Marriott led the way with gains of 14%, but online travel giant Booking Holdings (BKNG +1.22%) wasn't far behind with a 13% rise.
Marriott has a lot to gain from a resolution to the coronavirus crisis. About a quarter of the hotels in the Marriott system are closed at this point, and occupancy figures at those that have stayed open are discouraging. Revenue per available room in Marriott's most recent quarterly report was down 20% in North America and 30% internationally, and the plunge in April was much worse at roughly 90%.
Yet even if Marriott can get its own operations back to full speed, it still has some hurdles to overcome. With so many luxury high-end hotel properties, Marriott is susceptible to a pullback from travelers who are trying to economize on travel expenses. Even once people start traveling again, a recession could push them to less expensive alternatives to Marriott properties.
The Nasdaq has tended to outperform the broader market during the coronavirus crisis, largely because of the tech companies that are capitalizing on providing solutions to the resulting economic disruptions. Yet when there's good news on the coronavirus front, there are still plenty of Nasdaq stocks that are poised to benefit.
