Please ensure Javascript is enabled for purposes of website accessibility

Nasdaq Today: United Airlines Stock Rockets Higher; Reopening Hopes Help Marriott

By Dan Caplinger – May 18, 2020 at 12:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Hard-hit parts of the stock market saw big gains on Monday.

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 -0.30%) 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 -0.93%) led the Nasdaq 100 with a rise of 18%, while Marriott (MAR -1.85%) 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.

Jet aircraft with two engines, United logo, and blue, white and gray coloring.

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 -1.18%) 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.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings. The Motley Fool recommends Marriott International. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Marriott International Stock Quote
Marriott International
$144.46 (-1.85%) $-2.72
United Airlines Holdings Stock Quote
United Airlines Holdings
$35.09 (-0.93%) $0.33
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,114.99 (-0.30%) $-33.65
Booking Holdings Stock Quote
Booking Holdings
$1,706.28 (-1.18%) $-20.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.