The stock market continued to gain ground on Wednesday morning, buoyed by hopes for a successful economic recovery along with some positive earnings reports from well-regarded tech companies. Market participants have been increasingly optimistic about the prospects for businesses to bounce back from the disruptions that the coronavirus pandemic has wrought over the past several months. Just before 11 a.m. EDT, the Dow Jones Industrial Average (^DJI 0.59%) was up 320 points to 26,062. The S&P 500 (^GSPC -1.39%) had risen 32 points to 3,113, and the Nasdaq Composite (^IXIC -2.77%) had picked up 60 points to 9,668.

Airline stocks were among the big winners on Wednesday morning, with gains that easily topped the broader markets' moves higher. Even though the coronavirus-related challenges that airlines face are particularly difficult, investors like the signs they're seeing that suggest travelers want to get back in the air.

Airplane cockpit with various avionics and systems, at dusk.

Image source: Getty Images.

Nice moves higher for airline stocks

Gains in the airline sector Wednesday morning were broad. Among the top four U.S. carriers, United Airlines Holdings (UAL -0.28%) led the way with gains of 7.5%. Delta Air Lines (DAL -0.56%) and American Airlines Group (AAL -1.61%) followed with upward moves of between 5% and 6%, while Southwest Airlines (LUV -1.36%) weighed in with a better than 4% rise.

Some of the smaller carriers did even better. Allegiant Travel (ALGT -1.35%) and Mesa Air Group (MESA 0.57%) were up 11% on the day. No-frills player Spirit Airlines (SAVE -10.76%) and regional powerhouse JetBlue Airways (JBLU -3.67%) managed to gain almost 10%, and Alaska Air Group (ALK -1.16%) was just behind with a 9% boost. SkyWest (SKYW -3.93%) and Hawaiian Holdings (HA 1.98%) posted gains of 8% and 7%, respectively.

The one thing that all airlines have in common is that they want to see more travelers willing to fly, and trends suggest people are going back into the skies. Although traffic levels remain far below pre-coronavirus levels, the reported number of people moving through TSA checkpoints is now more than three and a half times as high as it was at its worst point in April. Airlines are starting to see upticks in reservation activity, especially among popular destinations sporting beaches or mountainous terrain.

Can airlines hold altitude?

To say that airlines have put the pandemic behind them, though, would be extremely premature. Even with signs of improving conditions, the pace of improvement has been slow. Would-be passengers are still waiting to see what post-pandemic travel will look like, and airlines are still struggling to come up with solutions that will meet health and safety needs while still preserving their long-term profitability.

Moreover, several unrelated macroeconomic trends could represent headwinds to airlines' recovery. Earlier this week, for instance, Chinese officials barred U.S. airlines from flying between the two countries, and the White House followed suit with reciprocal restrictions on Chinese airlines. Big carriers like Delta, American, and United are counting on international travel coming back, but geopolitical issues could stop that from happening.

Similarly, airlines had benefited from low fuel prices, but the energy markets have rebounded significantly. Even though oil at $40 per barrel is still inexpensive from a historical standpoint, the price has risen steeply in the past few weeks. Continued increases could add further costs, putting even more strain on airlines' finances.

At this point, airline stocks remain speculative in nature, with high potential reward, but high risk. Investors need to be aware of both before they invest in the industry, and shareholders can expect further share-price volatility in the months to come.