What happened

Shares of Boeing (NYSE:BA) opened Monday 7% higher, and shares of key suppliers are up even more, on investor optimism about progress in the race to find a vaccine for COVID-19. Commercial aerospace stocks have plunged this year due to the pandemic's chilling impact on the airline industry. The sooner the pandemic can be resolved, the better chance there is that the airlines survive and eventually resume buying airplanes.

Shares of Allegheny Technologies (NYSE:ATI) opened 13.6% higher, Spirit AeroSystems Holdings (NYSE:SPR) jumped 12%, TransDigm Group (NYSE:TDG) was up 10%, and both Heico (NYSE:HEI) and General Electric (NYSE:GE) climbed 9%. All of the stocks gave back part of those initial gains as the morning went on, but all were still handily beating the market as of 10:45 a.m. EDT today.

So what

A decadelong surge in new plane sales came to a grinding halt earlier this year after the COVID-19 pandemic decimated demand for travel, causing airlines that were in expansion mode coming into the year to suddenly focus on cost-cutting. The airlines are cutting flights and grounding planes, lessening demand for spare parts and putting Boeing's new-plane order book in jeopardy.

A vaccine wouldn't bring an end to the airlines' misery, as the U.S. economy is likely to be significantly damaged by the pandemic. But it is a good first step. Airlines and aerospace stocks are rallying with the broader market on Monday after biotech Moderna said its experimental COVID-19 vaccine produced antibodies that could "neutralize" the virus in a small early stage clinical trial.

A plane on the assembly line.

Image source: Getty Images.

Boeing has a substantial defense business, but its commercial division, and particularly new plane sales, have driven the stock higher in recent years. Spirit Aero, a one-time Boeing subsidiary that makes fuselages and other large pieces of Boeing and Airbus jets, counts on the two aerospace giants for the bulk of its revenue.

TransDigm gets more than half of its revenue from commercial aerospace and is reliant on spare parts sales for much of its earnings, while General Electric was counting on its aerospace division, specifically its aircraft engine business, to provide much-needed cash to help fund a turnaround in other parts of the company. Heico by comparison generates about half of its revenue from commercial aerospace. 

Spirit Aero is also getting a lift after Elliott Management, Paul Singer's activist hedge fund, disclosed a stake in the company. Spirit shares are down 70% year to date, but the investment suggests Singer either believes the sell-off was overdone or is preparing to push for change at the company.

GE, meanwhile, is likely benefiting from crude oil prices jumping off of their lows.

Now what

The vaccine headlines are certainly good news, but it's important to note that this is a small preliminary clinical trial with just eight patients. We are still months away, at best, from widespread vaccinations, and it could be significantly longer before the threat of COVID-19 is minimized.

That said, with most of these stocks down more than 50% year to date, any bit of good news is appreciated. If there is a partial airline recovery, expect the carriers to resume flying their existing fleets before committing to buying new aircraft. So companies like Heico and TransDigm that have a large spare-parts business should benefit first.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.