Please ensure Javascript is enabled for purposes of website accessibility

Why Carnival, Royal Caribbean, and Norwegian Cruise Line Stocks Are Rising Today

By Joe Tenebruso – Jun 8, 2020 at 12:39PM

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

Optimism abounds.

What happened

Cruise ship stocks jumped on Monday, following a stronger-than-expected jobs report on Friday. Investors are growing more optimistic that the economy could recover more quickly than many economists originally feared. That could be a boon for the major cruise ship operators, which tend to benefit when people have more money to spend on vacations.

As of 12:35 p.m. EDT, shares of Carnival (CCL -0.56%), Norwegian Cruise Line Holdings (NCLH -1.18%), and Royal Caribbean (RCL -0.85%) were up 12%, 11%, and 4%, respectively.

So what

Last week, economists were bracing for one of the worst job reports in history. Consensus estimates were for the unemployment rate to surge to nearly 20%, driven by a staggering 8 million job losses. 

However, the actual figures were far better than feared.

The Labor Department reported that 2.5 million more people were able to obtain work in May. That helped to reduce the unemployment rate from 14.7% to 13.3%.

A cruise ship sailing with the sun in the sky behind it.

Cruise ship stocks continued their ascent on Monday. Image source: Getty Images.

Although coronavirus-related misclassifications could have made the job report appear stronger than it was, the better-than-expected figures suggest that we may be past the peak of job losses. This, in turn, has fueled a rally in the financial markets, and travel-related stocks -- many of which saw their share prices pummeled during the coronavirus-driven downturn -- have been some of the biggest winners in recent days.

Now what

A rapid economic recovery could certainly help cruise ship companies. The more confident people are in their job prospects, the more likely they'll be to book vacations.

However, investors should recognize that the novel coronavirus remains a fearsome threat. With the economy reopening, the number of COVID-19 cases is sure to rise. If the number of infections grows rapidly, it could make people hesitant to book cruise trips, particularly since these ships -- with their cramped living quarters and limited medical facilities -- are prone to coronavirus outbreaks.

Thus, Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings remain high-risk stocks despite their recent gains.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. 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

Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$44.04 (-0.85%) $0.38
Carnival Corporation Stock Quote
Carnival Corporation
CCL
$8.90 (-0.56%) $0.05
Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
NCLH
$13.39 (-1.18%) $0.16

*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
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

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.