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eBay, Airline Stocks Lead Nasdaq 100 to New Intraday Record

By Dan Caplinger – Updated Jun 4, 2020 at 4:39PM

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The market couldn't hold onto its gains, but these stocks finished strong.

The stock market's recovery from the bear market in late February and March has been extraordinary, and the Nasdaq Composite (^IXIC -1.51%) has seen especially impressive gains. The Nasdaq 100 index of top Nasdaq stocks actually briefly moved into all-time record territory Thursday morning -- an enthusiastic response to prospects for a successful economic reopening. However, the market couldn't hold onto those gains, and the Nasdaq Composite finished the day down around 0.7%.

Even with the pullback, a couple of Nasdaq 100 stocks were especially strong. eBay (EBAY -2.33%) offered investors a positive reading on its e-commerce business, while airlines like United Airlines Holdings (UAL -1.16%) continued to move higher on hopes that they'll be able to find ways to be profitable and build a sustainable, long-term business model in a post-coronavirus world.

A brighter outlook for eBay

Shares of eBay rose 6% on Thursday following the online marketplace's latest read on its second-quarter financial results. The company has seen stronger sales volume than it initially expected, and that has shareholders excited about what eBay is accomplishing even in the middle of the coronavirus pandemic.

eBay logo in purple.

Image source: eBay.

eBay now expects second-quarter gross merchandise volume growth of between 23% and 26%, based on strong readings it's seen in both April and May. The company said all of its major categories are doing well, highlighting home and garden, electronics, fashion, auto parts, and collectibles. In addition, eBay is finding success with multiple avenues for boosting demand, including stronger organic traffic, and more effective marketing and platform-conversion efforts.

eBay is also seeing more users. On the buyer side, the company said it's brought in 6 million new and reactivated buyers in April and May. On the seller side, tens of thousands of small businesses have signed up to sell on eBay.

With similarly upped guidance on earnings and revenue, eBay looks poised to deliver a positive surprise when it announces its results formally in late July. That sent the stock to new highs, and there could be more gains ahead if the company can keep getting its share of e-commerce business.

No stall here

Shares of airline stocks did even better, with United Airlines Holdings rising 16% and American Airlines Group (AAL -1.71%) seeing gains of more than 40%. After having gotten beaten up badly, investors are pleased to see that airline companies are trying to get things back to normal.

American's big gain came as the airline said that it was going to expand its summer flight schedule. With many of those following the industry predicting that air travel would remain at severely depressed levels for much of the rest of the year, American expects to fly 55% of its domestic routes and 20% of its international routes in July.

Also helping airline stocks was relief on the regulatory front. The U.S. Department of Transportation granted requests to more than a dozen airlines that will allow them to stop serving 75 markets due to weak demand. Ordinarily, airlines would have to maintain minimum service levels in order to get financial assistance from the government, but the approval will allow them to cut costs and preserve service on more profitable routes.

Airline stocks  still have a long way to go before they recover fully, and it's far from clear what changes will be needed within the industry to survive and adapt. Nevertheless, investors are optimistic today, and they're hoping that airline companies will do what it takes to keep getting stronger.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends eBay and recommends the following options: long January 2021 $18 calls on eBay and short January 2021 $37 calls on eBay. The Motley Fool has a disclosure policy.

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Stocks Mentioned

eBay Inc. Stock Quote
eBay Inc.
EBAY
$36.81 (-2.33%) $0.88
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$32.53 (-1.16%) $0.38
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
AAL
$12.04 (-1.71%) $0.21
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$10,575.62 (-1.51%) $-161.89

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

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